Exhibit 2
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ASSET PURCHASE AGREEMENT
BETWEEN
RAILWORKS TRANSIT VEHICLE GROUP, INC.,
RAILWORKS CORPORATION,
AAI CORPORATION
AND
UNITED INDUSTRIAL CORPORATION
DATED AS OF SEPTEMBER 5, 2000
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TABLE OF CONTENTS
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Article I DEFINITIONS..........................................................................1
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SECTION 1.01 CERTAIN DEFINED TERMS.....................................................1
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SECTION 1.02 OTHER DEFINITIONAL PROVISIONS.............................................9
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SECTION 1.03 CAPTIONS.................................................................10
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SECTION 1.04 SUBSIDIARIES.............................................................10
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Article II SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES; CLOSING....................10
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SECTION 2.01 TRANSFER OF ASSETS.......................................................10
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SECTION 2.02 EXCLUDED ASSETS..........................................................12
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SECTION 2.03 ASSUMPTION OF LIABILITIES................................................12
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SECTION 2.04 EXCLUDED LIABILITIES.....................................................13
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SECTION 2.05 PURCHASE PRICE...........................................................14
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SECTION 2.06 ALLOCATION OF PURCHASE PRICE.............................................14
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SECTION 2.07 TRANSFER TAXES...........................................................15
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SECTION 2.08 CLOSING..................................................................15
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SECTION 2.09 BULK SALES COMPLIANCE....................................................15
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SECTION 2.10 PURCHASE PRICE ADJUSTMENT................................................15
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Article III REPRESENTATIONS AND WARRANTIES OF UIC AND SELLER..................................16
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SECTION 3.01 POWER OF UIC AND SELLER..................................................16
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SECTION 3.02 OWNERSHIP AND STATUS OF INTEREST IN SELLER...............................16
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SECTION 3.03 NO CONFLICTS OR LITIGATION...............................................16
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SECTION 3.04 CONTROL OF RELATED BUSINESSES............................................17
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Article IV REPRESENTATIONS AND WARRANTIES CONCERNING the business.............................17
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SECTION 4.01 QUALIFICATION............................................................17
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SECTION 4.02 REQUIRED GOVERNMENTAL CONSENTS...........................................17
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SECTION 4.03 CHARTER DOCUMENTS AND RECORDS; NO VIOLATION..............................18
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SECTION 4.04 NO DEFAULTS..............................................................18
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SECTION 4.05 SELLER SUBSIDIARIES......................................................18
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SECTION 4.06 PREDECESSOR STATUS; ETC..................................................18
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SECTION 4.07 RELATED PARTY AGREEMENTS.................................................18
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SECTION 4.08 LITIGATION...............................................................19
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SECTION 4.09 CUSTOMER CONTRACTS.......................................................19
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SECTION 4.10 COMPLIANCE WITH LAWS; PERMITS............................................19
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SECTION 4.11 CERTAIN ENVIRONMENTAL MATTERS............................................20
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SECTION 4.12 OWNERSHIP OF PURCHASED ASSETS............................................22
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SECTION 4.13 FINANCIAL STATEMENTS; DISCLOSURE.........................................22
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SECTION 4.14 ABSENCE OF UNDISCLOSED LIABILITIES.......................................23
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SECTION 4.15 ADEQUACY OF THE PURCHASED ASSETS.........................................23
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SECTION 4.16 RECEIVABLES..............................................................23
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SECTION 4.17 OWNED AND LEASED REAL PROPERTIES.........................................23
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SECTION 4.18 OWNED AND LEASED TRANSFERABLE PROPERTY, PLANT AND EQUIPMENT..............24
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SECTION 4.19 PROPRIETARY RIGHTS.......................................................24
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SECTION 4.20 COMMITMENTS..............................................................25
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SECTION 4.21 CAPITAL EXPENDITURES.....................................................27
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SECTION 4.22 INSURANCE................................................................27
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SECTION 4.23 EMPLOYEE MATTERS.........................................................27
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SECTION 4.24 COMPLIANCE WITH ERISA, ETC...............................................29
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SECTION 4.25 TAXES....................................................................29
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SECTION 4.26 ABSENCE OF CHANGES.......................................................29
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SECTION 4.27 PRODUCT QUALITY, WARRANTY CLAIMS, PRODUCT LIABILITY......................31
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SECTION 4.28 EXISTING PROJECT CONTRACTS...............................................31
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Article V REPRESENTATIONS AND WARRANTIES OF RW AND BUYER......................................31
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SECTION 5.01 ORGANIZATION, POWER......................................................31
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SECTION 5.02 AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS; CONSENTS............32
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SECTION 5.03 NO DEFAULTS..............................................................33
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SECTION 5.04 COMPLIANCE WITH LAWS; NO LITIGATION......................................33
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SECTION 5.05 EVALUATION OF THE BUSINESS AND SOURCES OF INFORMATION....................33
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Article VI COVENANTS EXTENDING TO THE CLOSING DATE............................................33
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SECTION 6.01 HSR ACT MATTERS..........................................................33
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SECTION 6.02 ACCESS AND COOPERATION; DUE DILIGENCE....................................34
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SECTION 6.03 CONDUCT OF BUSINESS PENDING CLOSING......................................34
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SECTION 6.04 PROHIBITED ACTIVITIES....................................................35
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SECTION 6.05 NO SHOP..................................................................36
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SECTION 6.06 NOTIFICATION OF CERTAIN MATTERS..........................................36
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SECTION 6.07 SUPPLEMENTAL INFORMATION.................................................37
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SECTION 6.08 WMATA BREDA REHABILITATION PROGRAM.......................................37
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SECTION 6.09 ACCESS TO EMPLOYEES......................................................38
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SECTION 6.10 EMPLOYEES................................................................38
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SECTION 6.11 PRELIMINARY CLOSING SCHEDULE.............................................39
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SECTION 6.12 EQUIPMENT LEASE..........................................................39
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SECTION 6.13 CERTAIN AGREEMENTS WITH RELATED PARTIES..................................39
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Article VII CONDITIONS TO CLOSING.............................................................40
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SECTION 7.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY..............................40
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SECTION 7.02 CONDITIONS TO THE OBLIGATIONS OF SELLER AND UIC..........................40
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SECTION 7.03 CONDITIONS TO THE OBLIGATIONS OF RW AND BUYER............................42
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Article VIII COVENANTS FOLLOWING THE CLOSING..................................................43
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SECTION 8.01 BOOKS AND RECORDS, TAX FILINGS...........................................43
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SECTION 8.02 FINAL CLOSING SCHEDULE...................................................44
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SECTION 8.03 NAME CHANGE..............................................................44
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SECTION 8.04 COLLECTION OF ACCOUNTS RECEIVABLE........................................45
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SECTION 8.05 SUBROGATION OF BUYER.....................................................45
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SECTION 8.06 FURTHER ASSURANCES.......................................................45
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SECTION 8.07 TRANSITIONAL SERVICES....................................................45
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Article IX INDEMNIFICATION....................................................................46
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SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................46
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SECTION 9.02 INDEMNIFICATION OF RW INDEMNIFIED PARTIES................................46
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SECTION 9.03 INDEMNIFICATION OF SELLER INDEMNIFIED PARTIES............................47
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SECTION 9.04 CONDITIONS OF INDEMNIFICATION............................................47
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SECTION 9.05 REMEDIES NOT EXCLUSIVE...................................................49
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SECTION 9.06 LIMITATIONS ON INDEMNIFICATION...........................................49
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Article X LIMITATIONS ON COMPETITION..........................................................50
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SECTION 10.01 DEFINITIONS..............................................................50
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SECTION 10.02 TRADE NAME AND NON-PUBLIC INFORMATION....................................51
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SECTION 10.03 NON-COMPETITION..........................................................52
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SECTION 10.04 NON-SOLICITATION.........................................................52
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SECTION 10.05 DAMAGES..................................................................52
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SECTION 10.06 REASONABLE RESTRAINT.....................................................52
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SECTION 10.07 SEVERABILITY; REFORMATION................................................53
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SECTION 10.08 INDEPENDENT COVENANT.....................................................53
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SECTION 10.09 MATERIALITY..............................................................53
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Article XI GENERAL PROVISIONS.................................................................53
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SECTION 11.01 TREATMENT OF CONFIDENTIAL INFORMATION....................................53
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SECTION 11.02 BROKERS AND AGENTS.......................................................54
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SECTION 11.03 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.................................54
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SECTION 11.04 ENTIRE AGREEMENT; AMENDMENT; WAIVERS.....................................55
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SECTION 11.05 COUNTERPARTS.............................................................55
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SECTION 11.06 EXPENSES.................................................................55
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SECTION 11.07 NOTICES..................................................................55
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SECTION 11.08 GOVERNING LAW............................................................56
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SECTION 11.09 EXERCISE OF RIGHTS AND REMEDIES..........................................57
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SECTION 11.10 REFORMATION AND SEVERABILITY.............................................57
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SECTION 11.11 REMEDIES CUMULATIVE......................................................57
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Article XII TERMINATION PROVISIONS............................................................57
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SECTION 12.01 TERMINATION OF AGREEMENT.................................................57
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SCHEDULES
SCHEDULE 1.01 - ADJUSTED INTERIM BALANCE SHEET
SCHEDULE 2.02 - MATERIAL ASSETS OF THE BUSINESS PRIMARILY USED BY OTHER
DIVISIONS
SCHEDULE 2.03(c) - SURETY AND BONDING OBLIGATIONS
SCHEDULE 2.06 - ALLOCATION OF PURCHASE PRICE
SCHEDULE 3.03 - DEFAULTS UNDER OTHER AGREEMENTS
SCHEDULE 3.04 - CONTROL OF RELATED BUSINESSES
SCHEDULE 4.01 - QUALIFICATION
SCHEDULE 4.05 - SELLER SUBSIDIARIES
SCHEDULE 4.06 - PREDECESSOR STATUS
SCHEDULE 4.07 - RELATED PARTY AGREEMENTS
SCHEDULE 4.08 - LITIGATION
SCHEDULE 4.09 - CUSTOMER CONTRACTS
SCHEDULE 4.10 - COMPLIANCE WITH LAWS; PERMITS
SCHEDULE 4.11 - ENVIRONMENTAL MATTERS
SCHEDULE 4.12 - OWNERSHIP OF PURCHASED ASSETS
SCHEDULE 4.13 - FINANCIAL STATEMENTS; DISCLOSURE
SCHEDULE 4.14 - UNDISCLOSED LIABILITIES
SCHEDULE 4.15 - ADEQUACY OF PURCHASED ASSETS
SCHEDULE 4.16 - RECEIVABLES
SCHEDULE 4.17(a) - OWNED AND LEASED REAL PROPERTIES
SCHEDULE 4.17(b) - EXCEPTIONS TO REAL PROPERTY LEASES
SCHEDULE 4.18 - PROPERTY, PLANT AND EQUIPMENT
SCHEDULE 4.19 - PROPRIETARY RIGHTS
SCHEDULE 4.20 - COMMITMENTS
SCHEDULE 4.21 - CAPITAL EXPENDITURES
SCHEDULE 4.22 - INSURANCE
SCHEDULE 4.23 - EMPLOYEE MATTERS
SCHEDULE 4.24 - EMPLOYEE BENEFIT PLANS
SCHEDULE 4.26 - CHANGES
SCHEDULE 4.27 - WARRANTY CLAIMS AND PRODUCT LIABILITY
SCHEDULE 4.28 - EXISTING PROJECT CONTRACTS
SCHEDULE 6.03 - CONDUCT OF BUSINESS PENDING CLOSING
SCHEDULE 6.04 - PROHIBITED ACTIVITIES
SCHEDULE 6.10 - EMPLOYEES
SCHEDULE 6.10(c) - SEVERANCE POLICY
SCHEDULE 7.02(c) - ETI ASSUMED CONTRACTS
SCHEDULE 10.01 - COMPETITION
SCHEDULE 10.04(b) - AFFILIATES OF BUYER
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EXHIBITS
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EXHIBIT A - ASSIGNMENT AND ASSUMPTION
EXHIBIT B - BILL OF SALE
EXHIBIT C - BUYER OFFICERS' CERTIFICATE
EXHIBIT D - OPINION OF COUNSEL TO RAILWORKS
EXHIBIT E - TRANSITIONAL SERVICES
EXHIBIT F - NOT USED
EXHIBIT G - NOT USED
EXHIBIT H - NOT USED
EXHIBIT I - LEASE AGREEMENT
EXHIBIT J - SELLER OFFICERS' CERTIFICATE
EXHIBIT K-1 - LEGAL OPINION OF OUTSIDE COUNSEL TO SELLER
EXHIBIT K-2 - LEGAL OPINION OF COUNSEL TO SELLER
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INDEX OF DEFINED TERMS
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Acquisition Proposal..................................................35
Adjusted Interim Balance Sheet.........................................1
Affiliate..............................................................1
Appointed Accountant..................................................42
Assumed Contracts.....................................................25
Assumed Intercompany Liabilities.......................................2
Assumed Liabilities....................................................2
Award Date............................................................36
Business...............................................................1
Business Day...........................................................2
Buyer..................................................................1
Buyer Final Closing Schedule..........................................42
CAF ...................................................................2
Capital Lease..........................................................2
Capital Stock..........................................................2
Cash Payment..........................................................13
Charter Documents......................................................2
Claim Notice..........................................................45
Closing................................................................2
Closing Date...........................................................2
Competitive Activities................................................48
Competitive Position..................................................48
Competitor............................................................48
Confidential Information...............................................2
Consent................................................................3
CPA...................................................................42
Customer..............................................................48
Damage.................................................................3
Damage Claim...........................................................3
Derivative Securities..................................................3
DGCL...................................................................3
Election Period.......................................................45
Employees.............................................................37
Entity.................................................................3
Environmental Laws....................................................19
Environmental Permits.................................................20
ERISA.................................................................28
ETI....................................................................3
ETI Financial Statements...............................................3
ETI Repayment..........................................................3
Exchange Act...........................................................3
Excluded Assets........................................................3
Excluded Liabilities...................................................4
Final Closing Schedule................................................42
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Financial Statements...................................................4
First Union Agreement..................................................4
GAAP...................................................................4
Governmental Approval..................................................4
Governmental Authority.................................................4
Governmental Requirement...............................................4
Guaranty...............................................................4
Hazardous Materials...................................................19
HSR Act................................................................5
Indebtedness...........................................................5
Indemnification Cap...................................................47
Indemnified Party.....................................................45
Indemnifying Party....................................................45
Indemnity Notice......................................................47
Information............................................................5
Interest Rate Protection Agreement.....................................5
Interim Balance Sheet..................................................5
Interim Balance Sheet Date.............................................5
Interim Financial Statements...........................................5
IRS....................................................................5
knowledge..............................................................5
Liabilities............................................................5
Lien...................................................................6
Litigation.............................................................6
Material...............................................................6
Material Adverse Effect................................................6
Net Working Capital Used...............................................6
NLRB..................................................................27
NMB...................................................................27
Non-compete Period....................................................48
Non-Public Information................................................48
Organization State.....................................................7
OSHA...................................................................9
Permits...............................................................19
Permitted Liens........................................................7
Person.................................................................7
Plans.................................................................28
Preliminary Closing Schedule..........................................37
Property, Plant and Equipment..........................................7
Proprietary Rights.....................................................7
Purchase Price.........................................................7
Purchased Assets.......................................................7
RCRA...................................................................9
Real Property.........................................................19
Related Party Agreement................................................8
Related Person.........................................................8
Release...............................................................19
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Representatives........................................................8
Returns................................................................8
RW.....................................................................1
RW Indemnified Loss...................................................45
RW Indemnified Party...................................................8
Securities Act.........................................................8
Seller.................................................................1
Seller Commitment.....................................................24
Seller Final Closing Schedule.........................................42
Seller Indemnified Loss...............................................45
Seller Indemnified Party...............................................8
Seller Subsidiaries....................................................8
Subsidiary.............................................................8
Supplemental Information..............................................36
Taxing Authority.......................................................8
Territory.............................................................48
Third Party Claim.....................................................45
Threshold Amount.......................................................9
Trade Secrets.........................................................49
Transaction Document...................................................9
Transferred Employees.................................................37
TSG....................................................................1
TSI....................................................................9
UIC....................................................................1
WMATA.................................................................36
WMATA Contract........................................................36
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated September 5, 2000, by
and between RailWorks Transit Vehicle Group, Inc., a Delaware corporation (the
"Buyer"), RailWorks Corporation, a Delaware corporation and owner of all of the
outstanding Capital Stock of Buyer ("RW"), AAI Corporation, a Maryland
corporation (the "Seller"), and United Industrial Corporation, a Delaware
corporation and owner of all of the outstanding Capital Stock of Seller ("UIC").
R E C I T A L S
A. Transportation Systems Group ("TSG"), a division of
Seller, is engaged, directly and through the Seller Subsidiaries (as defined
below), in the business of the overhaul and upgrading of mass-transit passenger
vehicles; the manufacture of passenger rail vehicle truck assemblies; the
construction of new car shells and final assembly of new rail transit vehicles;
and the engineering, development, integration and final assembly of new electric
trolleybuses (the "Business"); and
B. Buyer desires to purchase and assume from Seller, and
Seller desires to sell and assign to Buyer, all of the assets and properties
used in the operation of the Business and certain liabilities in connection
therewith, as a going concern; and
C. Buyer and Seller wish to provide for certain other
agreements that are related to the foregoing transactions.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein set forth, the sufficiency of which is
hereby acknowledged, the parties hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS.
As used in this Agreement and in the related Schedules and Exhibits,
the following terms have the meanings assigned to them below in this SECTION
1.01. Capitalized terms used in this Agreement and not defined below in this
SECTION 1.01 have the meanings assigned to them in the Recitals or elsewhere in
this Agreement, as the case may be.
"Adjusted Interim Balance Sheet" means the balance sheet
attached hereto as SCHEDULE 1.01, which shows the Interim Balance Sheet, as
adjusted for Excluded Assets and Excluded Liabilities and other adjustments
agreed to by the parties.
"Affiliate" means, as to any specified Person, any other
Person that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the possession,
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directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person (whether through ownership of Capital Stock
of that Person, by contract or otherwise).
"Assumed Intercompany Liabilities" means trade payables
owed by Seller to Affiliates of Seller and UIC (including Seller), which arose
in the ordinary course of the conduct of the Business, for goods sold or
services rendered to Seller under purchase orders, subcontracts or other
agreements, which are specifically related to the performance by the Business of
any of the Assumed Contracts.
"Assumed Liabilities" shall have the meaning set forth in
SECTION 2.03.
"Business Day" means a day, other than a Saturday or
Sunday, on which banks are open for business in the city of New York, New York.
"CAF" means AAI-CAF Transit, LLC, a limited liability
company of which Seller and Construcciones y Auxiliares, S.A. (CAF), a Spanish
company, each owns 50% of the issued and outstanding Capital Stock.
"Capital Lease" means a lease of (or other agreement
conveying the right to use) real or personal property that is required to be
classified and accounted for as a capital lease under GAAP as in effect on the
date of this Agreement.
"Capital Stock" means, with respect to: (a) any
corporation, any share, or any depositary receipt or other certificate
representing any share, of an equity ownership interest in that corporation; and
(b) any other Entity, any share, membership or other percentage interest, unit
of participation or other equivalent (however designated) of an equity interest
in that Entity.
"Charter Documents" means, with respect to any Entity at
any time, in each case as amended, modified and supplemented at that time, (a)
the articles or certificate of formation, incorporation or organization (or the
equivalent organizational documents) of that Entity, (b) the bylaws or
partnership agreement or regulations (or the equivalent governing documents) of
that Entity and (c) each document setting forth the designation, amount and
relative rights, limitations and preferences of any class or series of that
Entity's Capital Stock or of any rights in respect of that Entity's Capital
Stock.
"Closing" means the consummation of the transactions
contemplated by this Agreement.
"Closing Date" means the date upon which the Closing
occurs.
"Confidential Information" means, with respect to any
Person, all trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from reports,
investigations, research, work in progress, inventions, codes, marketing and
sales programs, capital expenditure projects, cost summaries, pricing formulae,
contract analyses, financial information, projections, confidential filings with
any Governmental Authority and all other confidential, nonpublic concepts,
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methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of that Person.
"Consent" means the approval, agreement, authorization,
consent, exemption of waiver required to transfer, sell or assign any of the
Purchased Assets.
"Damage," as to any Person, means any cost, damage or
expense (including reasonable fees and actual disbursements by attorneys,
consultants, experts or other Representatives and Litigation costs), any fine,
penalty or liability of any other nature of, or imposed upon, that Person, net
of any associated or resulting insurance or similar recoveries, and net of tax
benefits, after taking into account any offsetting tax liabilities of such
Person resulting from any such benefit; provided, however, that in the event of
a Third Party Claim (as defined in ARTICLE IX), Damages shall include all costs,
damages and expenses of whatever kind or nature, including consequential,
exemplary, punitive or treble damages, if applicable, payable to or recovered by
the claimant therein.
"Damage Claim" means, as asserted (a) against any specified
Person, any claim, demand or Litigation made or pending against that Person for
Damages to any other Person, or (b) by the specified Person, any claim or demand
of the specified Person against any other Person for Damages to the specified
Person.
"DGCL" means the General Corporation Law of the State of
Delaware.
"Derivative Securities" of a specified Entity means any
Capital Stock or debt security or other Indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any option,
warrant or other right to acquire, (a) any unissued Capital Stock of the
specified Entity or (b) any Capital Stock of the specified Entity which has been
issued and is being held by the Entity directly or indirectly as treasury stock.
"Entity" means any sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"ETI" means Electric Transit, Inc., a corporation jointed
owned by Seller and Skoda a.s., a Czech Republic company, of which Seller owns
35% of the issued and outstanding Capital Stock.
"ETI Financial Statements" means the audited statements of
assets and liabilities as of December 31, 1999, and results of operations for
the year then ended of ETI prepared in accordance with GAAP consistently
applied.
"ETI Repayment" means the aggregate of all amounts owing to
Seller from ETI, the method of repayment of which is set forth in the Framework
Agreement, and which is reflected on the Interim Balance Sheet under the line
item "ETI Note Receivable" (it is understood by the parties that the ETI
Repayment shall remain a Liability of ETI and is not being assumed by Buyer or
RW).
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"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Excluded Assets" shall have the meaning set forth in
SECTION 2.02.
"Excluded Liabilities" means those Liabilities of Seller
that are not being assumed by Buyer, which Liabilities are described in SECTION
2.04.
"Financial Statements" means the Interim Financial
Statements and the ETI Financial Statements.
"First Union Agreement" means that certain Revolving Line
of Credit Loan Agreement, Term Loan Agreement and Security Agreement dated as of
June 11, 1997, as amended, by and among First Union Commercial Corporation and
UIC, Seller, AAI Engineering Support, Inc., AAI Systems Management, Inc.,
AAI/ACL Technologies, Inc., Detroit Stoker Company, Midwest Metallurgical
Laboratory, Inc., Neo Products Co., Symtron Systems, Inc., UIC-Del. Corporation
and AAI MICROFLITE Simulation International Corporation.
"Framework Agreement" means the Contract Framework
Agreement dated as of November 13, 1999, among ETI, Seller, Skoda a.s., Skoda
ENERGO, s.r.o. and Skoda OSTROV s.r.o.
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time which have been or
are applied on a basis consistent with the Entity's most recent financial
statements.
"Governmental Approval" means at any time any
authorization, consent, approval, permit, franchise, certificate, license,
implementing order or exemption of, or registration or filing with, any
Governmental Authority, including any certification or licensing of a natural
person to engage in a profession or trade or a specific regulated activity, at
that time.
"Governmental Authority" means (a) any national, state,
county, municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of any
such government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own account.
"Governmental Requirement" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
writ, edict, award, authorization or other requirement of any Governmental
Authority in effect at that time or (b) any obligation included in any
certificate, certification, franchise, permit or license issued by any
Governmental Authority or resulting from binding arbitration, including any
requirement under common law, at that time.
"Guaranty" means, for any specified Person, without
duplication, any liability, contingent or otherwise, of that Person guaranteeing
or otherwise becoming liable for any obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including
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any liability of the specified Person, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) that obligation
or to purchase (or to advance or supply funds for the purchase of) any security
for the payment of that obligation, (b) to purchase property, securities or
services for the purpose of assuring UIC of that obligation of its payment or
(c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay that obligation; provided, that the term "Guaranty" does not
include endorsements for collection or deposit in the ordinary course of the
endorser's business.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person means, without duplication,
(a) any liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds, letters of
credit, banker's acceptances and similar instruments), for the deferred purchase
price of property or services or arising under conditional sale or other title
retention agreements, other than trade payables arising in the ordinary course
of business consistent with past practice, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) in respect of Capital Leases or (iv) in
respect of Interest Rate Protection Agreements; (b) any liability secured by any
Lien upon any property or assets of that Person (or upon any revenues, income or
profits of that Person therefrom), whether or not that Person has assumed that
liability or otherwise become liable for the payment thereof; or (c) any
liability of others of the type described in the preceding clause (a) or (b) in
respect of which that Person has incurred, assumed or acquired a liability by
means of a Guaranty.
"Information" means written information relating to the
Business, including (a) data, certificates, reports and statements (excluding
Financial Statements) and (b) summaries of unwritten agreements, arrangements,
contracts, plans, policies, programs or practices or of unwritten amendments or
modifications of, supplements to or waivers under any of the foregoing
documents.
"Interest Rate Protection Agreement" means, for any Person,
an interest rate swap, cap or collar agreement or similar arrangement providing
for the transfer or mitigation of interest rate risks of that Person either
generally or under specific contingencies between that Person and any other
Person.
"Interim Balance Sheet" means the Balance Sheet of TSG as
of the Interim Balance Sheet Date.
"Interim Balance Sheet Date" means July 2, 2000.
"Interim Financial Statements" means the Interim Balance
Sheet together with the related statement of income for the six months then
ended.
"IRS" means the Internal Revenue Service.
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"knowledge" of Seller or UIC shall mean the actual
knowledge, after due inquiry, of Richard R. Erkeneff, Robert Worthing, John T.
Merry, James Perry, Phil T. Gansert, Kevin Carpenter, Linda DeLotto, Jackson
Bell and Jean-Marie Padden.
"Liabilities" means all debts, obligations and liabilities,
fixed, contingent, accrued, known or unknown, whether or not classified as a
liability in conformity with GAAP, including, without limitation, Indebtedness;
indebtedness under acceptance facilities or letters of credit; liabilities
secured by a lien even though the indebtedness has not been assumed; unfunded
and termination pension liabilities; guarantees, leases, obligations to purchase
goods or services or to advance funds; the provisions of any security
outstanding; contingent claims; and obligations under agreements, instruments or
undertakings.
"Lien" means, with respect to any property or asset of any
Person (or any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise), (a) any mortgage, lien, security
interest, pledge, attachment, levy or other charge or encumbrance of any kind
thereupon or in respect thereof or (b) any other arrangement under which the
same is transferred, sequestered or otherwise identified with the intention of
subjecting the same to, or making the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured creditors of that Person, including any "adverse claim" (as defined in
Section 8-302(b) of each applicable Uniform Commercial Code) in the case of any
Capital Stock. For purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to that asset.
"Litigation" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or pending
before any Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any Entity, material to the
business, operations, property or assets, liabilities, financial condition or
results of operations of that Entity and its Subsidiaries considered as a whole.
In furtherance and not in limitation of the foregoing, and as applicable, any
event, circumstance, condition or state of fact having a value of $25,000 or
more shall be deemed to be Material.
"Material Adverse Effect" means, with respect to the
consequences of any fact or circumstance (including the occurrence or
non-occurrence of any event) to the Business that such fact or circumstance has
caused, is causing or will cause, directly, indirectly or consequentially,
singly or in the aggregate with other facts and circumstances, (i) if the effect
of which is quantifiable, any Damages in excess of $2,000,000 and (ii) if the
effect of which is not quantifiable, an adverse effect which is material to the
business, operations, property or assets, liabilities, financial condition or
results of operations of the Business.
"Net Working Capital Used" means, for the period commencing
on July 3, 2000 and ending on the Closing Date, the difference between (i) the
aggregate amount expended (determined on a cash basis) to operate the Business
(including payables of a type which would be Assumed Intercompany Liabilities
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and capital costs in connection with the renovation and equipping of Building
111 being leased by Seller to Buyer pursuant to the Real Property Lease as
hereinafter defined, but not including payments to UIC, Seller or any of their
Affiliates which do not constitute ordinary course trade payables), plus
$231,606 per month, and (ii) the amount of cash received from operation of the
Business excluding the ETI Repayment. In determining Net Working Capital Used
any payments which relate to, or comprise, the "Primus Advance" or the "ETI
Reimbursement," as each term is defined in SCHEDULE 2.02 and the payments to
employees referred to in section (c) of SCHEDULE 4.23 shall not be included
under subclause (i) above.
"Organization State" means, as applied to: (a) any
corporation, its state or other jurisdiction of incorporation; (b) any limited
liability company, partnership or limited partnership, the state or other
jurisdiction under whose laws it is organized and existing in that legal form;
and (c) any other Entity, the state or other jurisdiction whose laws govern that
Entity's internal affairs.
"Permitted Liens" means, as applied to the property or
assets of any Person (or any revenues, income or profits of that Person
therefrom): (a) Liens for Taxes if the same are not at the time due and
delinquent; (b) Liens of carriers, warehousemen, mechanics, laborers and
materialmen for sums not yet due; (c) Liens incurred in the ordinary course of
that Person's business in connection with workmen's compensation, unemployment
insurance and other social security legislation (other than pursuant to ERISA or
Section 412(n) of the Code); (d) Liens incurred in the ordinary course of that
Person's business in connection with deposit accounts or to secure the
performance of bids, tenders, trade contracts, statutory obligations, surety and
appeal bonds, performance and return-of-money bonds and other obligations of
like nature; (e) easements, rights-of-way, reservations, restrictions and other
similar encumbrances incurred in the ordinary course of that Person's business
or existing on property and not materially interfering with the ordinary conduct
of that Person's business or the use of that property; (f) defects or
irregularities in that Person's title to its real properties which do not
materially (i) diminish the value of the surface estate or (ii) interfere with
the ordinary conduct of that Person's business or the use of any of such
properties; (g) any interest or title of a lessor of assets being leased by any
Person pursuant to any Capital Lease disclosed in SCHEDULE 4.18 or any lease
that, pursuant to GAAP, would be accounted for as an operating lease; and (h)
Liens securing purchase money Indebtedness disclosed in SCHEDULE 4.17 OR 4.18 so
long as such Liens do not attach to any property or assets other than the
properties or assets purchased with the proceeds of such Indebtedness.
"Person" means any natural person, Entity, estate, trust,
union or employee organization or Governmental Authority.
"Property, Plant and Equipment" means at any time any
property that then would be included and classified as property, plant and
equipment (but excluding any real property) on a consolidated balance sheet of
Seller prepared in accordance with GAAP.
"Proprietary Rights" means (a) patents, applications for
patents and patent rights, (b) in each case, whether registered, unregistered or
under pending registration, trademark rights, tradenames, trade name rights,
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corporate names, business names or any rights associated with such name or any
right to use such name in all jurisdictions in which Seller uses or has a right
to use any such name, trade styles or dress, service marks and logos and other
trade designations and copyrights and (c), in the case of Seller or any Seller
Subsidiary, all agreements relating to the technology, know-how or processes
used in the Business.
"Purchased Assets" has the meaning set forth in SECTION
2.01.
"Purchase Price" means the price payable by Buyer to Seller
as consideration for the sale of the Purchased Assets as more fully described in
SECTION 2.05.
"Related Party Agreement" means any contract or other
agreement, written or oral, (a) to which Seller or any Seller Subsidiary is a
party or is bound or by which any property of Seller or any Seller Subsidiary is
bound or may be subject and (b) (i) to which UIC or any of UIC's Related Persons
or Affiliates also is a party, (ii) of which UIC or any of UIC's Related Persons
or Affiliates is a beneficiary or (iii) as to which any transaction contemplated
thereby properly would be characterized (without regard to the amount involved)
as a related party transaction for purposes of applying the disclosure
requirements of GAAP or the SEC.
"Related Person" of a Person means: (a) if that Person is a
natural person, (i) any immediate family member of that Person, (ii) any Estate
of that Person, (iii) the trustee of any inter vivos or testamentary trust of
which all the beneficiaries are Related Persons of that Person and (iv) any
Entity the entire equity interest in which is owned by any one or more of that
Person and Related Persons of that Person; and (b) if that Person is an Entity,
Estate or trust, (i) any Person who owns an equity interest in that Person on
the date hereof, (ii) any Person who would be a Related Person under clause (a)
of this definition of a natural person who is an ultimate beneficial owner of
that Person or (iii) any other Entity the entire equity interest in which is
owned by any one or more of that Person and Related Persons of that Person. As
used in this definition, "Estate" means, as to any natural person who has died
or been adjudicated mentally incompetent by a court of competent jurisdiction,
(i) that person's estate or (ii) the administrator, conservator, executor,
guardian or representative of that estate.
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents
of that Person, or any other representatives of that Person or of any of those
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents.
"Returns" means the returns, reports or statements
(including any information returns) any Governmental Requirement requires to be
filed for purposes of any Tax.
"RW Indemnified Party" means RW and its Affiliates and each
of their respective officers, directors, employees, agents and counsel.
"Securities Act" means the Securities Act of 1933, as
amended.
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"Seller Indemnified Party" means Seller, UIC and each of
Seller's and UIC's Affiliates, and each of their respective officers, directors,
employees, agents and counsel.
"Seller Subsidiaries" means at any time any Entity that is
a Subsidiary of Seller and that is engaged in the Business at that time, and
shall include ETI, CAF and TSI.
"Subsidiary" of any specified Person at any time, means any
Entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"Taxing Authority" means any Governmental Authority having
or purporting to exercise jurisdiction with respect to any Tax.
"Threshold Amount" means $500,000.
"Transaction Document" means this Agreement and the other
written agreements, documents, instruments and certificates executed pursuant to
or in connection with this Agreement, including those specified in ARTICLE VII
to be delivered at or before the Closing, all as amended, modified or
supplemented from time to time.
"TSI"means AAI Transportation Systems, Inc.
SECTION 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Except as otherwise specified herein, all references
herein to any Governmental Requirement defined or referred to herein, including
the Code, ERISA, the Exchange Act, Resource Conservation and Recovery Act
("RCRA"), Occupational Safety and Health Act ("OSHA") and the Securities Act,
shall be deemed references to that Governmental Requirement or any successor
Governmental Requirement, as the same may have been amended or supplemented from
time to time, and any rules or regulations promulgated thereunder.
(b) When used in this Agreement, the words "herein,"
"hereof" and "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any provision of this Agreement, and the words
"Article," "Section," "Schedule" and "Exhibit" refer to Articles and Sections
of, and Schedules and Exhibits to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(d) The word "including" (and, with correlative meaning,
the word "include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
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SECTION 1.03 CAPTIONS.
Captions to Articles, Sections and subsections of, and Schedules and
Exhibits to, this Agreement or any other Transaction Document are included for
convenience of reference only, and such captions shall not constitute a part of
this Agreement or any other Transaction Document for any other purpose or in any
way affect the meaning or construction of any provision of this Agreement or any
other Transaction Document.
SECTION 1.04 SUBSIDIARIES.
Any representation, warranty, covenant or agreement made on behalf of
Seller shall be deemed to be made by and with respect to the Seller and TSI.
Seller shall cause TSI to comply with the representations, warranties, covenants
and agreements of this Agreement, as if, and to the same effect, TSI were a
party hereto.
ARTICLE II
SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF LIABILITIES; CLOSING
SECTION 2.01 TRANSFER OF ASSETS.
On the terms and subject to the conditions set forth in this
Agreement, Seller shall, at the Closing, sell, transfer and assign to Buyer, and
Buyer shall purchase and acquire from Seller, all of Seller's right, title and
interest, as of the Closing Date, in and to all of the assets used in the
Business and not used primarily by other divisions or businesses of Seller
(collectively, except for the Excluded Assets set forth in SECTION 2.02 hereof,
the "Purchased Assets"), including, but not limited to:
(a) All of the Property, Plant and Equipment, fixtures and leasehold
improvements owned by Seller;
(b) Seller's interest in all real property leases to which Seller is
a party, all of which leases are identified in SCHEDULE 4.17;
(c) Seller's interest in all personal property leases to which Seller
is a party;
(d) All of Seller's inventories of supplies, raw materials, parts,
finished goods, work-in-process, product labels and packaging materials and
Seller's interest in all orders or contracts for the purchase of supplies, raw
materials, parts, product labels and packaging materials;
(e) Seller's interest in all licenses, contracts or agreements to
which Seller is a party and including, without limitation, those identified on
SCHEDULE 4.10 and SCHEDULE 4.20 as being assumed by Buyer;
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(f) All unfilled or uncompleted customer contracts, commitments or
purchase or sales orders received and accepted by Seller in the ordinary course
of business consistent with past practice;
(g) All Proprietary Rights;
(h) All of Seller's books, records and other documents and
information relating to the Purchased Assets, including, without limitation, all
customer, prospect, dealer and distributor lists, sales literature, inventory
records, purchase orders and invoices, sales orders and sales order log books,
customer information, commission records, correspondence, employee payroll and
personnel records (to the extent related to the Business and not subject to any
obligation of non-disclosure or confidentiality, and in any event subject to the
employees' consent), product data, material safety data sheets, price lists,
product demonstrations, quotes and bids and all product catalogs and brochures;
(i) All accounts or notes receivable owing to Seller;
(j) The current telephone listings and the temporary right to use the
telephone numbers currently being used at Seller's principal offices and other
offices or facilities of Seller, to terminate not later than that date which is
six months from the Closing Date;
(k) All permits, licenses and other Governmental Approvals held by
Seller, to the extent they are assignable;
(l) All prepaid expenses and deposits made by Seller;
(m) All guarantees and warranties under which Seller is a beneficiary
thereof to the extent applicable to the Purchased Assets and to the extent
transferable;
(n) Any rights to recovery by Seller arising out of litigation that
is pending prior to the Closing Date;
(o) The Capital Stock of ETI, CAF and TSI owned by Seller;
(p) The contracts and arrangements between Seller and UIC and any
employees, consultants and other persons performing services for, or related to,
the Business with respect to confidentiality, non-competition and the transfer
of intellectual property, all of which contracts or arrangements are listed on
SCHEDULE 2.01(P);
(q) ETI Repayment proceeds received by Seller, to the extent that
such proceeds received after the Interim Balance Sheet Date exceed $6,500,000
(plus accrued interest and penalties thereon determined in accordance with the
Framework Agreement); and
(r) Goodwill (including all goodwill associated with and symbolized
by all Proprietary Rights), all related tangibles and intangibles which Seller
uses and all rights to continue to use the Purchased Assets in the conduct of a
going business;
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in each case only to the extent of those assets used in the Business and not
used primarily by other divisions or businesses of Seller.
The parties hereto expressly agree that Buyer is not assuming any of
the liabilities, obligations or undertakings relating to the Purchased Assets,
except for Assumed Liabilities.
SECTION 2.02 EXCLUDED ASSETS.
(a) Notwithstanding the terms of SECTION 2.01, all assets of Seller
that are not Purchased Assets (the "Excluded Assets") shall be retained by
Seller and shall not be sold, transferred or assigned to Buyer in connection
with the purchase of the Purchased Assets, including, without limitation:
(i) All cash of the Business and all bank accounts;
(ii) Such licenses, permits or other certificates of authority
which, by their terms, are nonassignable, all of which are
identified as being nonassignable on SCHEDULE 4.10;
(iii) All of Seller's rights under and in consideration to be
received pursuant to this Agreement;
(iv) ETI Repayment proceeds received by Seller after the
Interim Balance Sheet Date up to $6,500,000 (plus accrued
interest and penalties thereon determined in accordance with
the Framework Agreement);
(v) Any assets listed on SCHEDULE 2.02, which Schedule shall
include a list separately indicating Material assets used in
the Business but which are primarily used by divisions of
Seller other than TSG; and
(vi) the SEPTA Contract.
(b) Seller shall retain, and Buyer shall not assume, and nothing
contained in this Agreement shall be construed as a transfer to Buyer of, any
assets owned by Seller that are not used in the conduct of the Business.
SECTION 2.03 ASSUMPTION OF LIABILITIES.
Buyer shall, as of the Closing Date, assume, pay and perform in
accordance with their terms or otherwise satisfy the following and only the
following (the "Assumed Liabilities"):
(a) Trade payables (including Assumed Intercompany Liabilities) and
accrued liabilities of Seller (excluding intercompany Liabilities other than as
described above) reflected on the Interim Balance Sheet, and trade payables
(including Assumed Intercompany Liabilities) and accrued Liabilities of Seller
(excluding intercompany Liabilities other than as described above) that have
been incurred in the ordinary course of business consistent with past practice
since the date of the Interim Balance Sheet through the Closing Date, a complete
list of which, based on information then available, will be provided to Buyer at
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the Closing, subject to being updated and finalized as provided in SECTION 6.11
and SECTION 8.02;
(b) Seller's obligations under the leases, agreements, contracts,
arrangements and licenses listed as Assumed Contracts on SCHEDULE 4.20;
(c) To the extent provided in SECTION 7.02(c), UIC's and Seller's
liabilities for surety and bonding obligations related to Assumed Contracts,
which surety and bonding obligations are identified on SCHEDULE 2.03(C);
(d) Seller's liabilities in the first two bulleted items on SCHEDULE
4.08, but not including any other litigations, whether or not identified on such
Schedule; provided, that with respect to the Drabek v. AAI et al. litigation,
the first monies paid by the insurance carrier under the applicable insurance
policies against which a claim based on such litigation has been made, and/or by
Skoda a.s. or its Affiliates under a claim for indemnification asserted by
Seller, shall be paid to Buyer to the extent of payment made by it in settlement
of the litigation or in payment of a judgment or award entered therein; the
balance, if any, of monies so paid shall be paid first to Seller to the extent
of out-of-pocket costs paid by Seller prior to July 2, 2000 in connection with
such litigation and then to Buyer to the extent of out-of-pocket costs paid by
Buyer in connection with such litigation; and
(e) Liabilities under Environmental Laws occurring in connection with
acts, omissions or conditions occurring on or after the Closing Date.
Seller shall retain, and Buyer shall not assume, and nothing
contained in this Agreement shall be construed as a transfer to Buyer of, any
Liabilities owed by Seller that are not described in this SECTION 2.03 or not
used in the conduct of the Business.
SECTION 2.04 EXCLUDED LIABILITIES.
(a) Seller shall be responsible for and shall discharge and perform
in accordance with their respective terms all of the Liabilities, obligations
and undertakings of Seller not assumed by Buyer pursuant to SECTION 2.03 hereof
including, but not limited to (i) any Liabilities that did not arise in the
ordinary course of business consistent with past practice from the Interim
Balance Sheet Date to the Closing Date; (ii) any obligations or liabilities of
Seller or UIC arising under this Agreement; (iii) any obligation of Seller or
UIC for federal, state or local income tax liability and subject to SECTION
2.07, sales and use taxes (including interest and penalties) arising from the
operations of Seller up to the Closing Date or arising out of the sale by Seller
of the Purchased Assets pursuant hereto; (iv) any obligation of Seller or UIC
for expenses incurred in connection with the sale of the Purchased Assets
pursuant hereto, including any prepayment penalties or other charges or expenses
payable in connection with the repayment of any Indebtedness which is an Assumed
Liability; (v) any Liability (including presently existing contingent unfunded
liability) arising under any multiemployer pension or benefit plans prior to the
Closing; (vi) any Liability other than Assumed Intercompany Liabilities
(including presently existing contingent unfunded Liability) to Seller, UIC or
any Affiliate of either of them; (vii) Seller Commitments other than the Assumed
Contracts; (viii) Liabilities under Environmental Laws that arise out of acts,
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omissions or conditions occurring prior to the Closing Date; (ix) the SEPTA
Contract; or (x) any Liability under the Worker Adjustment and Retraining
Notification Act arising out of the transaction contemplated hereby (the
"Excluded Liabilities"); or
(b) Other than as set forth above in SECTION 2.03, Seller shall retain, and
Buyer shall not assume, and nothing contained in this Agreement shall be
construed as an assumption by Buyer of, any liabilities, obligations or
undertakings of Seller of any nature whatsoever, whether accrued, absolute,
fixed or contingent, known or unknown, due or to become due, unliquidated or
otherwise.
SECTION 2.05 PURCHASE PRICE.
The Purchase Price shall consist of the following:
(a) The assumption by Buyer of the Assumed Liabilities; and.
(b) Cash (the "Cash Payment") payable by federal funds wire transfer
in immediately available funds to an account or accounts specified in writing by
Buyer or Seller, as the case may be, as follows:
(i) to the extent that Net Working Capital Used (as determined
on the Preliminary Closing Schedule (as defined in SECTION
6.11) is more than $5,000,000, from Buyer to Seller in the
amount determined by subtracting $5,000,000 from Net Working
Capital Used (as determined on the Preliminary Closing
Schedule); or
(ii) in the event that Net Working Capital Used (as determined
on the Preliminary Closing Schedule) equals $5,000,000, no
Cash Payment shall be made; or
(iii) in all other cases, from Seller to Buyer in the amount
equal to $5,000,000 minus Net Working Capital Used (as
determined on the Preliminary Closing Schedule); and
(c) In the event the WMATA Contract becomes an Assumed Contract in
accordance with SECTION 6.08, Buyer shall pay to Seller $500,000 upon the Award
Date and thereafter beginning 120 days after the Award Date, Buyer shall pay to
Seller $125,000 per month for twelve (12) months.
SECTION 2.06 ALLOCATION OF PURCHASE PRICE.
The allocation of the Purchase Price among the Purchased Assets for
purposes of Section 1060 of the Code shall be as provided on SCHEDULE 2.06 and
Buyer and Seller agree to be bound by such fair market value determination and
allocation and to complete and attach Internal Revenue Service Form 8594 to
their respective tax returns accordingly. The allocation of the Purchase Price
was bargained and negotiated for and each party agrees to report the
transactions contemplated hereby for financial reporting, and all other purposes
in accordance with all applicable rules and regulations and to take no position
inconsistent with such allocation in any administrative or judicial examination
or other proceeding.
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SECTION 2.07 TRANSFER TAXES.
Seller and Buyer shall each pay fifty percent of all sales, use and
transfer taxes, if any, incurred in connection with the transactions
contemplated by this Agreement.
SECTION 2.08 CLOSING.
(a) The Closing shall take place at the offices of Dorsey & Whitney
LLP, 250 Park Avenue, New York, New York at 10:00 a.m. local time, on October 2,
2000, or as soon thereafter as practicable and after the satisfaction or waiver
of the conditions precedent set forth in ARTICLE VII. The Closing may occur at
such other time and place as counsel for the Buyer and counsel for Seller shall
mutually agree.
(b) At the Closing, the following actions will be taken by the
parties and the completion of each action shall be a further condition to the
Closing:
(i) Seller shall deliver to Buyer, in form satisfactory to
Buyer, the Assignment and Assumption in the form attached
hereto as EXHIBIT A and such other deeds, bills of sale,
endorsements, consents, assignments, receipts and other
instruments as shall be sufficient to vest in the Buyer good
and marketable title to the Purchased Assets free and clear of
all Liens, except as otherwise permitted by this Agreement;
(ii) Buyer shall make the Cash Payment, subject to adjustment
as provided in SECTION 2.05(b); and
(iii) Buyer shall deliver to Seller, in such form as in each
case is satisfactory to Seller, instruments as shall be
sufficient to effect the assumption by the Buyer of the
Assumed Liabilities.
SECTION 2.09 BULK SALES COMPLIANCE.
To the extent the bulk sales law (Uniform Commercial Code, Article 6
or any Government Regulations of similar import) of any state in which Seller
has assets or conducts business is applicable to the transactions herein
contemplated, the parties waive compliance with such law. In lieu of such
compliance, Buyer has assumed the Assumed Liabilities and Seller has agreed
elsewhere in this Agreement to pay and discharge the Excluded Liabilities. Each
of Seller and Buyer acknowledges that its failure to pay and discharge the
Excluded Liabilities (in the case of Seller) or the Assumed Liabilities (in the
case of Buyer) constitutes a breach or default of its covenants and agreements
hereunder.
SECTION 2.10 PURCHASE PRICE ADJUSTMENT.
To the extent that Net Working Capital Used as calculated in the
Final Closing Schedule (as defined in SECTION 8.02) is different than Net
Working Capital Used as calculated in the Preliminary Closing Schedule (as
defined in SECTION 6.11), either Seller or Buyer, as appropriate, shall make an
appropriate cash payment to the other.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UIC AND SELLER
UIC and Seller, jointly and severally, represent and warrant to, and
agree with, RW and Buyer that all the following representations and warranties
in this ARTICLE III are as of the date of this Agreement, and will be, as
amended or supplemented pursuant to SECTION 6.07, on the Closing Date, true and
correct:
SECTION 3.01 POWER OF UIC AND SELLER.
(a) Each of UIC and Seller has the full corporate power, legal
capacity and authority to execute and deliver this Agreement and each other
Transaction Document to which UIC or Seller, respectively, is a party and to
perform its obligations in this Agreement and in all other Transaction Documents
to which it is a party. This Agreement constitutes, and each such other
Transaction Document, when executed and delivered by UIC and Seller, will
constitute, the legal, valid and binding obligation of UIC and Seller,
respectively, to the extent a party thereto, enforceable against each of them in
accordance with its terms, except as that enforceability may be (i) limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and (ii) subject
to general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
(b) Each of UIC and Seller has obtained, in accordance with all
applicable Governmental Requirements and its Charter Documents, all approvals
of, and taken all actions necessary for the authorization, execution, delivery
and performance by UIC and Seller of this Agreement and the other Transaction
Documents to which either of UIC or Seller is a party (other than as required
under the HSR Act or under contracts with Governmental Authorities).
(c) Each of UIC and Seller (i) is a corporation duly organized,
validly existing and in good standing under the laws of its Organization State
and (ii) has all requisite corporate power and authority under those laws and
its Charter Documents to own or lease and to operate its properties and to carry
on its business as now conducted.
SECTION 3.02 OWNERSHIP AND STATUS OF INTEREST IN SELLER.
UIC is the record and beneficial owner of all of the issued and
outstanding Capital Stock of Seller.
SECTION 3.03 NO CONFLICTS OR LITIGATION.
The execution, delivery and performance in accordance with their
respective terms by each of UIC and Seller of this Agreement and the other
Transaction Documents to which each of them is a party does not and will not (i)
violate or conflict with any Governmental Requirement, (ii) except as set forth
on SCHEDULE 3.03, breach or constitute a default under any agreement or
instrument to which either of them is a party or by which either of them is
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bound, the result of which would be to prohibit or interfere with the
consummation of the transactions contemplated by this Agreement or (iii) result
in the creation or imposition of, or afford any Person the right to obtain, any
Lien upon any of the Purchased Assets, or upon any revenues, income or profits
of the Business. No Litigation is pending or, to the knowledge of UIC and
Seller, threatened to which UIC or Seller is or may become a party which (i)
questions or involves the validity or enforceability of any of UIC's or Seller's
obligations under any Transaction Document or (ii) seeks (or reasonably may be
expected to seek) (A) to prevent or delay the consummation by UIC or Seller of
the transactions contemplated by this Agreement or to be consummated by UIC or
Seller or (B) Damages in connection with any consummation by UIC or Seller of
the transactions contemplated by this Agreement.
SECTION 3.04 CONTROL OF RELATED BUSINESSES.
Except as set forth in SCHEDULE 3.04, neither UIC nor Seller is,
alone or with one or more other Persons, a controlling Affiliate of any Entity,
business or trade (other than Seller and the Seller Subsidiaries) that is
engaged in any line of business which is the same as or similar to the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE BUSINESS
Seller and UIC, jointly and severally, represent and warrant to, and
agree with, RW and Buyer that all the following representations and warranties
in this ARTICLE IV are as of the date of this Agreement, and will be, as amended
or supplemented pursuant to SECTION 6.07, on the Closing Date, true and correct:
SECTION 4.01 QUALIFICATION.
SCHEDULE 4.01 lists all the jurisdictions in which Seller and each of
the Seller Subsidiaries is authorized or qualified to own or lease and to
operate the properties of the Business or to carry on the Business, and neither
the Seller nor any Seller Subsidiary owns, leases or operates properties related
to or used in the operation of the Business or carries on business which is
Material to the Business in any jurisdiction not listed thereon.
SECTION 4.02 REQUIRED GOVERNMENTAL CONSENTS.
Except as may be required by the HSR Act or under contracts with
Governmental Authorities, no Governmental Approvals are required to be obtained,
and no reports or notices to or filings with any Governmental Authority are
required to be made for the execution, delivery or performance by Seller of the
Transaction Documents to which it is a party, the enforcement against Seller of
its obligations thereunder or the effectuation of the transactions contemplated
thereby.
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SECTION 4.03 CHARTER DOCUMENTS AND RECORDS; NO VIOLATION.
Seller has caused true, complete and correct copies of the Charter
Documents, each as in effect on the date hereof, and the minute books and
similar records of the Seller Subsidiaries to be delivered to RW. No Material
breach or violation of any Charter Document of the Seller Subsidiaries has
occurred and is continuing.
SECTION 4.04 NO DEFAULTS.
No condition or state of facts exists, or, with the giving of notice
or the lapse of time or both, would exist, which (a) entitles any Person to
obtain any Lien (other than a Permitted Lien) upon any Purchased Assets (or upon
revenues, income or profits derived from any Purchased Assets) or (b)
constitutes a Material violation or breach of, or a default under, any Assumed
Contract by Seller or the Seller Subsidiaries.
SECTION 4.05 SELLER SUBSIDIARIES.
SCHEDULE 4.05 sets forth the form of organization, legal name, each
assumed name and Organization State of each Seller Subsidiary. Except as
disclosed in SCHEDULE 4.05, the Capital Stock of each Seller Subsidiary is owned
and controlled, directly or indirectly, by the Seller. SCHEDULE 4.05 sets forth,
by each class and each series within each class, the number of outstanding
shares of Capital Stock of the Seller Subsidiary, (a) the Seller's aggregate
direct and indirect ownership of those shares and (b) the name and address of
record and percentage ownership of those shares of each holder of record thereof
other than the Seller or a Seller Subsidiary. No Lien exists on any outstanding
share of Capital Stock of any Seller Subsidiary which is owned directly or
indirectly by the Seller other than (x) the Liens, if any, described in SCHEDULE
4.05, all of which will be released at or before the Closing, and (y) Permitted
Liens. Except as set forth in SCHEDULE 4.05, the Seller does not own, of record
or beneficially, directly or indirectly through any Person, and does not
control, directly or indirectly through any Person or otherwise, any Capital
Stock or Derivative Securities of any Entity engaged in the Business, other than
a Seller Subsidiary.
SECTION 4.06 PREDECESSOR STATUS; ETC.
To the knowledge of Seller, SCHEDULE 4.06 lists all the legal and
assumed names of all predecessor companies of Seller for the past five years
that are or were engaged in the operation of the Business. Except as disclosed
in SCHEDULE 4.06, Seller has not been a Subsidiary or division of another
corporation or a part of an acquisition that later was rescinded within such
period.
SECTION 4.07 RELATED PARTY AGREEMENTS.
SCHEDULE 4.07 lists all Related Party Agreements that relate to or
arise out of the Business, the Purchased Assets, or the Assumed Liabilities that
are currently in effect and that shall require Seller to make payments or render
services of a value in excess of $50,000.
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SECTION 4.08 LITIGATION.
Except as disclosed in SCHEDULE 4.08, no Litigation is pending or, to
the knowledge of Seller, threatened to which Seller or any Seller Subsidiary is
or may become a party which relates to or arises out of the Business, Purchased
Assets or Assumed Liabilities.
SECTION 4.09 CUSTOMER CONTRACTS.
Except as set forth in SCHEDULE 4.09, none of the Assumed Contracts
(as defined below) (a) is a contract with any Governmental Authority subject to
price redetermination or renegotiation or (b) is a contract designated by the
relevant Governmental Authority as a "small business set-aside" contract,
minority set-aside contract, women-owned business set-aside contract, or other
similar designation which could adversely affect RW's ability to continue to
service such accounts or adversely affect the amount of consideration to be
earned from servicing such accounts.
SECTION 4.10 COMPLIANCE WITH LAWS; PERMITS.
(a) Seller and its officers, directors, agents and employees have
complied in all Material respects with, and neither Seller nor UIC has received
any written notice or charge asserting any violation of or liability under, all
applicable laws, regulations and other requirements, including, but not limited
to, federal, state, local and foreign laws, ordinances, rules, regulations and
other requirements pertaining to product labeling, consumer products safety,
equal employment opportunity, employee retirement, affirmative action and other
hiring practices, occupational safety and health, workers' compensation,
unemployment and building and zoning codes, which Materially affect the Business
or the Purchased Assets and to which Seller may be subject, and no claims have
been filed against Seller alleging a violation of any such laws, regulations or
other requirements. Neither UIC nor Seller has any knowledge of any action,
pending or threatened, to change the zoning or building ordinances or any other
laws, rules, regulations or ordinances Materially affecting the Business or
Purchased Assets. Seller is not relying on any exemption from or deferral of any
such applicable law, regulation or other requirement that would not be available
to Buyer after the Closing.
(b) Seller has, in full force and effect, all licenses, permits and
certificates from Governmental Agencies necessary or desirable for the operation
of the Business (collectively, the "Permits"). SCHEDULE 4.10 lists all Permits,
with an indication as to whether the Permit is assignable to Buyer. Seller has
conducted the Business in Material compliance with all terms and conditions of
the Permits.
(c) Seller has not made or agreed to make gifts of money, other
property or similar benefits (other than incidental gifts of articles of nominal
value) to any actual or potential customer, supplier, governmental employee or
any other person in a position to assist or hinder Seller in connection with any
actual or proposed transaction in connection with the Business.
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SECTION 4.11 CERTAIN ENVIRONMENTAL MATTERS.
(a) As used in this SECTION 4.11, the following terms shall have the
following meanings:
(i) "Hazardous Materials" means any toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance
as defined in or governed by any Environmental Laws (including
without limitation, any common law).
(ii) "Environmental Laws" means all applicable federal, state
and local laws, rules, regulations, codes, ordinances,
permits, licenses and judgments relating to pollution,
contamination or protection of the environment (including,
without limitation, all applicable federal, state and local
laws, rules, regulations, codes, ordinances, permits, licenses
and judgments relating to Hazardous Materials in effect as of
the date of this Agreement).
(iii) "Release" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, ejecting, leaching,
escaping or any other release, or threatened release, of any
Hazardous Material.
(b) Except as set forth on SCHEDULE 4.11, the Business and the real
properties listed on SCHEDULE 4.11, which are all of the real properties owned
or leased by Seller, UIC or a Seller Subsidiary (if in the United States), upon
which the Business is being or has been conducted (the "Real Property") are in
Material compliance with all applicable Environmental Laws.
(c) Except as set forth on SCHEDULE 4.11, Seller has obtained, and
maintained in full force and effect, all Material environmental permits,
licenses, certificates of compliance, approvals and other authorizations
necessary to conduct the Business and own or operate the Real Property
(collectively, the "Environmental Permits"). A copy of each such Environmental
Permit shall be provided by the Seller to RW prior to the Closing. Seller has
conducted the Business in compliance with all terms and conditions of the
Environmental Permits. Seller has filed all reports and notifications required
to be filed under and pursuant to all Environmental Laws applicable to the
Business.
(d) No Hazardous Materials have been incinerated, deposited or
released on, under or about any part of the Business or the Real Property;
(e) Except as set forth in SCHEDULE 4.11,
(i) no Hazardous Materials have been contained, handled, used,
treated, stored, manufactured or processed on or about the
Business or the Real Property, and such activities are and
have been in Material compliance with applicable Environmental
Laws;
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(ii) no Hazardous Materials have been generated as waste
materials on or about the Business or Real Properties and said
Hazardous Materials that have been generated are presently and
in the past have been disposed of at licensed or permitted
disposal or treatment facilities or other facilities in
compliance with Environmental Laws not located at the Business
or Real Property;
(iii) the Business and the Real Property, and any improvements
thereon, contain no asbestos, urea, lead paint, LFCs,
formaldehyde, radon at levels above natural background,
polychlorinated biphenyls (PCBs) or pesticides; and
(iv) no aboveground or underground storage tanks are located
on, under or about the Real Property, or have been located on,
under or about the Real Property and then subsequently been
removed or filled. If any such storage tanks exist on, under
or about the Real Property, such storage tanks have been duly
registered with all appropriate governmental entities and are
otherwise in Material compliance with all applicable
Environmental Laws.
(f) Except as set forth in SCHEDULE 4.11 and except as would not be
Material, Seller has not received notice alleging in any manner that Seller is
or might be potentially responsible for any Release of Hazardous Materials, or
any costs arising under or violation of Environmental Laws.
(g) To the knowledge of Seller and UIC, and except as would not be
Material, no expenditure will be required in order for RW to comply with any
Environmental Laws in effect at the time of the Closing in connection with the
operation or continued operation of the Business or the Real Property in a
manner substantially similar to the current operation thereof by Seller.
(h) Except as set forth on SCHEDULE 4.11, to the knowledge of Seller
and UIC, the Real Property is not and has not been listed on the United States
Environmental Protection Agency National Priorities List of Hazardous Waste
Sites, or any other list, schedule, law, inventory or record of hazardous or
solid waste sites maintained by any federal, state or local agency.
(i) Seller has disclosed and delivered to RW all environmental
reports, files, records, citations and investigations that Seller or UIC has
obtained or ordered with respect to the Business and the Real Property.
(j) Except as set forth on SCHEDULE 4.11, no part of the Business or
the Real Property has been used as a landfill, dump or other disposal, storage,
transfer, handling or treatment area for Hazardous Materials, or as a gasoline
service station or a facility for selling, dispensing, storing, transferring,
disposing or handling petroleum and/or petroleum products, except as would not
be Material.
(k) No Lien has been attached or filed against Seller or a Seller
Subsidiary (as it relates to the Business) or the Real Property in favor of any
governmental or private entity for (i) any liability or imposition of costs
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under or violation of any applicable Environmental Law or (ii) any Release of
Hazardous Materials.
(l) Except as set forth on SCHEDULE 4.11, neither Seller nor any
Seller Subsidiary has transported or arranged for the transportation for
storage, treatment or disposal of any Hazardous Materials to any location which
is: (i) listed on the EPA's National Priorities List of Hazardous Waste sites;
(ii) listed on the Comprehensive Environmental Response, Compensation, Liability
Information System or on any similar state list; or (iii) the subject of any
regulatory or legal action which may lead to claims against Seller or such
Seller Subsidiary for damages to natural resources, personal injury,
remediation, clean-up costs or corrective action under any Environmental Law.
SECTION 4.12 OWNERSHIP OF PURCHASED ASSETS.
Seller has good and marketable title to, or a valid leasehold
interest in, all of the Purchased Assets, which, as of the Closing Date will be
free and clear of all Liens or Liabilities, except Permitted Liens, or Liens or
Liabilities set forth in SCHEDULES 4.12, 4.17, 4.18 or 4.19.
SECTION 4.13 FINANCIAL STATEMENTS; DISCLOSURE.
(a) The Interim Financial Statements (including in each case the
related schedules and notes) delivered to RW present fairly, in all Material
respects, the financial position of TSG at the Interim Balance Sheet Date and
the related operating results for the period set forth therein and have been
prepared in accordance with GAAP (except for normal year end adjustments, which,
in the aggregate, are not material to the business, operations, property or
assets, liabilities, financial condition or results of operations of the
Business and the absence of footnotes). As of the Interim Balance Sheet Date,
neither Seller nor any Seller Subsidiary then had any outstanding Indebtedness
to any Person or any Liabilities of any kind (including contingent obligations,
tax assessments or unusual forward or long-term commitments), or any unrealized
or anticipated loss, which in the aggregate then were Material to the Business
and required to be reflected in the Interim Financial Statements or in the notes
related thereto in accordance with GAAP (except for normal year end adjustments
which, in the aggregate, are not material to the business, operations, property
or assets, liabilities, financial condition or results of operations of the
Business and the absence of footnotes) which were not so reflected.
(b) Except as set forth on SCHEDULE 4.13, (a) all inventories, net of
reserves determined in accordance with GAAP, that are classified as such on the
Interim Balance Sheet are, and all inventories included in the Purchased Assets
will be, to the knowledge of Seller and UIC, merchantable and salable or usable
in the ordinary course of the Business; (b) the inventories reflected on the
Interim Balance Sheet are, and the inventories included in the Purchased Assets
will be, (i) reasonable in relation to the then-existing circumstances of the
Business and classifiable as current assets in accordance with GAAP and (ii)
consistent with their past practices.
(c) Except as set forth on SCHEDULE 4.13, all accounts receivable
that are classified as such on the Interim Balance Sheet, and all accounts
receivable included in the Purchased Assets (i) are, and will be, as applicable,
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bona fide accounts receivable and (ii) arose from the performance of services or
the sale of goods to customers of the Business.
(d) Except as set forth on SCHEDULE 4.13, all accounts payable that
are classified as such on the Interim Balance Sheet, and all accounts payable
included in the Assumed Liabilities (i) are, and will be, as applicable, only
those Liabilities which would be (A) included in a balance sheet prepared in
accordance with GAAP and (B) classifiable as accounts payable or accrued
Liabilities, and (ii) arose, or will have arisen, as applicable, in the ordinary
course of business and relate or will relate only to Purchased Assets.
SECTION 4.14 ABSENCE OF UNDISCLOSED LIABILITIES.
With respect to the Purchased Assets or the operations of the
Business, neither Seller nor the Seller Subsidiaries have any Liabilities of a
kind required to be reflected on a balance sheet prepared in accordance with
GAAP arising out of transactions or events heretofore entered into, or any
action or inaction, or any state of facts existing, with respect to or based
upon transactions or events heretofore occurring, except (i) as reflected in the
Interim Balance Sheet, (ii) Liabilities which have arisen after the date of the
Interim Balance Sheet in the ordinary course of business consistent with past
practice (none of which is a Material uninsured Liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit), or (iii) as
otherwise set forth in the SCHEDULE 4.14.
SECTION 4.15 ADEQUACY OF THE PURCHASED ASSETS.
Except as set forth in SCHEDULE 4.15, the Purchased Assets
constitute, in the aggregate, all of the assets and property necessary for the
conduct of the Business in the manner in which and to the extent to which it is
currently being conducted. No portion of the Business is owned or operated by
any person or entity other than Seller through TSG or a Seller Subsidiary.
SECTION 4.16 RECEIVABLES.
SCHEDULE 4.16 sets forth a list, as of the Interim Balance Sheet
Date, of all of the accounts receivable, notes receivable or other advance
receivables arising out of the operation of the Business.
SECTION 4.17 OWNED AND LEASED REAL PROPERTIES.
(A) SCHEDULE 4.17(A) lists and describes in all Material respects:
(i) all real properties used at any time, for any purpose in connection with the
Business, that are owned by Seller and the Seller Subsidiaries and, for each of
those properties, the address thereof, the type and square footage of each
structure located thereon and the use thereof; (ii) all real properties used at
any time, for any purpose in connection with the Business, of which any of
Seller and Seller Subsidiaries is the lessee and, for each of those properties,
the address thereof, the type and square footage of each structure located
thereon Seller or a Seller Subsidiary is leasing and the expiration date of its
lease; and (iii) SCHEDULE 4.17(A) indicates which real properties, if any, are
Excluded Assets.
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(b) Seller has provided RW with true, correct, and complete copies of
all leases under which Seller or a Seller Subsidiary is leasing each of the
properties listed as being leased in SCHEDULE 4.17(A). Except as set forth in
SCHEDULE 4.17(B), (i) each of those leases is, to the knowledge of Seller, valid
and binding on the lessor party thereto, (ii) the lessee party thereto has not
sublet any of the leased space to any Person other than Seller or a Seller
Subsidiary, and (iii) no consent or agreement of any third party is required for
the assignment of each lease to the Buyer.
(c) Seller has disclosed in all Material respects in writing to RW
all plans or projects with respect to the Business involving the opening of new
operations, the expansion of any existing operations or the acquisition of any
real property or existing business, with respect to which, if pursued by Seller
or any Seller Subsidiary, would require additional capital expenditures in
excess of $250,000.
SECTION 4.18 OWNED AND LEASED TRANSFERABLE PROPERTY, PLANT AND EQUIPMENT.
(A) SCHEDULE 4.18 sets forth a list of the Property, Plant and
Equipment having a book value in excess of $25,000 individually owned and leased
by Seller and the Seller Subsidiaries and used primarily in the operation of the
Business.
(b) Except as set forth in SCHEDULE 4.18 and except for Permitted
Liens, Seller or a Seller Subsidiary has good, valid and marketable title to,
free and clear of all Liens, each property listed in that Schedule as being
owned.
(c) Seller has provided RW with complete copies of all leases under
which Seller or a Seller Subsidiary is leasing each of the properties listed as
being leased on SCHEDULE 4.18, (i) each of those leases is, to the knowledge of
Seller, valid and binding on the lessor party thereto, (ii) the lessee party
thereto has not sublet any of the leased property to any Person other than
Seller or a Seller Subsidiary, and no consent or agreement of any third party is
required for the assignment of each lease to Buyer other than as set forth on
SCHEDULE 4.17(B).
(d) Except as set forth in SCHEDULE 4.18, all the Property, Plant and
Equipment listed therein are, as of the date of the Interim Balance Sheet, and
will be, on the Closing Date, in good working order and condition, ordinary wear
and tear excepted, and adequate for the purposes for which they presently are
being used or held for use.
SECTION 4.19 PROPRIETARY RIGHTS.
Except as set forth in SCHEDULE 4.19, Seller and the Seller
Subsidiaries own or have the legal right to use all Proprietary Rights that are
used primarily in the Business, in each case free of any claims or infringements
known to Seller or UIC. SCHEDULE 4.19 (a) lists these Proprietary Rights and (b)
indicates those owned by Seller or any Seller Subsidiary and, for those not
listed as so owned, the agreement or other arrangement pursuant to which they
are possessed. Except as set forth in SCHEDULE 4.19, (a) no consent of any
Person will be required for the use of any of these Proprietary Rights by Buyer
or any other Affiliate of RW following the Closing and (b) no governmental
registration of any of these Proprietary Rights has lapsed or expired or, to the
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knowledge of Seller, been canceled, abandoned, opposed or the subject of any
reexamination request. Neither Seller nor UIC has received written notice of,
and to the knowledge of Seller and UIC, no employee, former employee, or present
or former consultant or independent contractor who is performing or has
performed services for the Business has, any Material claim with respect to any
Proprietary Right set forth on SCHEDULE 4.19, except as disclosed therein.
SECTION 4.20 COMMITMENTS.
(A) SCHEDULE 4.20 sets forth a complete list of each of the following
(each a "Seller Commitment") to which any of Seller and the Seller Subsidiaries
is a party or by which any of its properties is bound and which presently
remains executory in whole or in any part and which are used in the Business:
(i) each partnership, joint venture, shareholder, operating,
formation or cost-sharing agreement;
(ii) each guaranty or suretyship, indemnification or
contribution agreement or performance bond, including the
agreements between Seller or Seller Subsidiaries and any
entity which has issued a bond or surety in favor of any
customer of Seller or any Seller Subsidiary;
(iii) each instrument, agreement or other obligation
evidencing or relating to Indebtedness or related to or
arising out of the Business, the Purchased Assets or the
Assumed Liabilities or to money lent or to be lent to another
Person;
(iv) each contract to purchase or sell real property that is
included in the Purchased Assets;
(v) each agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or
attorneys (other than in connection with this Agreement and
the transactions contemplated hereby) involving total payments
under any one such agreement within any 12-month period in
excess of $50,000 and which is not terminable without penalty
and on no more than 30 days' prior notice;
(vi) each Related Party Agreement involving total payments
within any 12-month period in excess of $25,000 and which is
not terminable without penalty on no more than 30 days' prior
notice;
(vii) each agreement for the acquisition or provision of
services (in the context of employment or otherwise),
supplies, equipment, inventory, fixtures or other property
involving more than $50,000 in the aggregate;
(viii) each contract containing any noncompetition agreement,
covenant or undertaking;
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(ix) each agreement between Seller and any employee of, or
consultant to, Seller that relates to the freedom of such
employee or consultant to (A) compete in the Business with any
Person, (B) disclose Confidential Information to any Person or
(C) convey to Seller any Proprietary Rights;
(x) each agreement providing for the purchase from a supplier
of all or substantially all the requirements of the Business
of a particular product or service; or
(xi) each other agreement or commitment related to or arising
out of the Business, Purchased Assets or Assumed Liabilities
not made in the ordinary course of business consistent with
past practice and that is Material to the Business.
Complete copies of all written Seller Commitments, and complete
written descriptions of all oral Seller Commitments, have heretofore been
delivered to RW. Except as set forth in SCHEDULE 4.20 there are: (i) no existing
or asserted defaults, events of default or events, occurrences, acts or
omissions that, with the giving of notice or lapse of time or both, would
constitute defaults or events of default under any Seller Commitment that is
Material to the Business by any of Seller and the Seller Subsidiaries or, to the
knowledge of Seller, any other party thereto; and (ii) no penalties have been
incurred, nor are amendments pending, with respect to the Seller Commitments
that are Material to the Business. The Seller Commitments are in full force and
effect and are valid and enforceable obligations of Seller or the Seller
Subsidiaries parties thereto (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity)) and, to the knowledge of Seller, the other parties thereto in
accordance with their respective terms, and no defenses, off-sets or
counterclaims have been asserted or, to the knowledge of Seller, may be made by
any party thereto (other than by Seller or a Seller Subsidiary), nor has Seller
or a Seller Subsidiary, as the case may be, waived any rights thereunder, which
in any case would be Material to the Business, except as described in SCHEDULE
4.20.
(B) SCHEDULE 4.20 has been marked to indicate those Seller
Commitments that are neither Purchased Assets and/or Assumed Liabilities (such
unmarked Seller Commitments shall be referred to herein as the "Assumed
Contracts").
(c) Except as disclosed in SCHEDULE 4.20 or contemplated hereby or by
any other Transaction Document to which Seller or any Seller Subsidiary is a
party: (i) neither Seller nor any Seller Subsidiary has received notice of any
plan or intention of any other party to any Assumed Contract to exercise any
right to cancel or terminate any Assumed Contract, and neither Seller nor any
Seller Subsidiary knows of any condition or state of facts which would justify
the exercise of such a right; (ii) neither Seller nor any Seller Subsidiary
currently contemplates, or has reason to believe any other Person currently
contemplates, any amendment or change to any Assumed Contract; (iii) no consent
or agreement of any third party is required for the assignment of each Assumed
Contract to the Buyer; and (iv) contains any provision granting any third party
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the right to accelerate any obligations under, or to terminate, any of the
Assumed Contracts as a result of the transactions contemplated hereby.
SECTION 4.21 CAPITAL EXPENDITURES.
SCHEDULE 4.21 sets forth the total amount of capital expenditures
currently anticipated by Seller's management to be incurred by Seller and the
Seller Subsidiaries with respect to the Business during the remainder of the
current fiscal year and for the fiscal year ending in 2001.
SECTION 4.22 INSURANCE.
SCHEDULE 4.22 lists and briefly describes each insurance policy
maintained by Seller with respect to the Purchased Assets and operations of the
Business and sets forth the date of expiration of each such insurance policy.
All of such insurance policies are in full force and effect and are issued by
insurers of recognized responsibility. Seller is not in Material default with
respect to its obligations under any insurance policies relating to the
Purchased Assets or the Business. Neither Seller, UIC nor any Seller Subsidiary
has received any notice or other communication from any issuer of any such
insurance policy of any Material increase in any deductibles, retained amounts
or the premiums payable thereunder, and, to the knowledge of the Seller, no such
increase in deductibles, retainages or premiums is threatened.
SECTION 4.23 EMPLOYEE MATTERS.
(a) With respect to employees of Seller or any of its Affiliates who
perform services primarily for the benefit of the Business, (i) to the knowledge
of Seller and UIC, no such employee or group of such employees has any plans to
terminate his or its employment, other than termination in the ordinary course
of business; (ii) Seller has complied in all Material respects with all laws and
Governmental Requirements relating to the employment of labor, including
provisions thereof relating to wages, hours, benefits, equal opportunity,
collective bargaining and the payment of social security and other taxes; (iii)
Seller has no Material labor relations problem relating to the Business pending
and its labor relations are satisfactory; (iv) except as set forth in SCHEDULE
4.23, neither Seller nor UIC has received written notice of any workers'
compensation claims Material to the Business, nor, to the knowledge of Seller
and UIC, are there any facts that would give rise to such a claim; (v) to the
knowledge of Seller and UIC, no such employee is subject to any secrecy or
noncompetition agreement or any other agreement or restriction of any kind that
would impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the Business; (vi) neither Seller
nor UIC has received written notice of any filed or pending citation, notice of
contest or administrative enforcement proceeding by the Occupational Health and
Safety Administration or other governmental and state authorities relating to
health and safety against Seller; (vii) to the knowledge of Seller and UIC, no
enforcement proceeding has been initiated, and neither Seller nor UIC has
received written notice of any enforcement proceeding under Federal or foreign
immigration law; and/or (viii) Seller has not taken any action which would
constitute a "Mass Layoff" or "Plant Closing" within the meaning of the Worker
Adjustment and Retraining Notification Act or otherwise trigger notice
requirements or liability under any local or state plant closing notice law;
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and, to the extent any liability should arise between the date of this Agreement
and the Closing as a result of employment actions by Seller, Seller will be
solely responsible financially therefor.
(B) SCHEDULE 4.23 lists, as of the date set forth in the Schedule,
each employee of Seller engaged in the operation of the Business earning in
excess of $75,000 and the position, title, remuneration (including any scheduled
salary or remuneration increases), date of employment and accrued vacation pay
of each such employee. SCHEDULE 4.23 lists all employees engaged in the
operation of the Business who are parties to employment agreements with Seller
or any Seller Subsidiary.
(c) Except as set forth in SCHEDULE 4.23, with respect to employees
of Seller or any of its Affiliates who perform services primarily for the
benefit of the Business, (i) such employees of Seller have not been and are not
represented by a union, labor organization or collective bargaining unit which
was either National Labor Relations Board ("NLRB") or National Mediation Board
("NMB") certified or voluntarily recognized or recognized under foreign law;
(ii) Seller has not been and is not a signatory to a collective bargaining
agreement with any union, labor organization or collective bargaining unit
relating to the Business; (iii) neither Seller nor UIC has received written
notice that any representation election petition has been filed by any such
employees of the Seller or is pending with the NLRB or NMB, and no union
organizing campaign involving any of such employees has occurred, or, to the
knowledge of Seller or UIC, is threatened or in progress; (iv) no NLRB unfair
labor practice charges or Litigation alleging such claims have been filed or, to
the knowledge of Seller or UIC, threatened and/or are presently pending against
Seller or any labor organization representing any such employees; (v) no
grievance or arbitration demand (or "minor dispute") relating to the Business,
whether or not filed pursuant to a collective bargaining agreement, has been
filed or, to the knowledge of Seller or UIC, threatened or is pending against
Seller relating to the Business; (vi) in the past one (1) year, no hand billing,
picketing, work stoppage (sympathetic or otherwise), or other "concerted action"
involving any such employees has occurred, is, to the knowledge of Seller or
UIC, threatened or is in progress; and/or (vii) neither Seller nor UIC has
received written notice that any breach of contract and/or denial of fair
representation claim relating to the Business has been filed or is pending
against Seller and/or any labor organization representing its employees.
(d) Except as set forth in SCHEDULE 4.23, neither Seller nor any of
the Seller Subsidiaries is a party to any agreement, or has established any
policy, practice or program, requiring any of them to make a payment or provide
any other form of compensation or benefit or vesting rights to any person
performing services for Seller or any of the Seller Subsidiaries that would not
be payable or provided in the absence of this Agreement or the consummation of
the transactions contemplated by this Agreement.
(e) Except as set forth in SCHEDULE 4.23, all of the persons
providing services to the Business as "independent contractors" or "consultants"
are "independent contractors" for purposes of all applicable Governmental
Requirements, including, without limitation, Governmental Requirements relating
to the employment of labor and employees, and to Taxes.
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SECTION 4.24 COMPLIANCE WITH ERISA, ETC.
SCHEDULE 4.24 sets forth all "employee benefit plans," as defined in
Section 3(3) of ERISA, and all other employee benefit plans and arrangements,
including incentive, equity or equity-based compensation and deferred
compensation arrangements, covering the employees of the Seller, UIC and the
Seller Subsidiaries who have been or currently are engaged in the operation of
the Business (collectively, the "Plans"). None of the Plans is a multiemployer
plan, as defined in Section 3(37) of ERISA, nor has Seller ever contributed to a
multiemployer plan with respect to employees of the Business. Seller has
provided RW with summary plan descriptions or, if no summary plan description
exists, written summaries of each Plan. To the extent required (either as a
matter of law or to obtain the intended tax treatment and tax benefits), all
employee benefit plans (as defined in Section 3(3) of ERISA) which Seller does
maintain or to which it does contribute comply in all Material respects with the
requirements of ERISA and the Code.
SECTION 4.25 TAXES.
(a) There are no liens for Taxes upon any Purchased Assets except for
Permitted Liens.
(b) No property included within the Purchased Assets of Seller or any
Tax Affiliate is property that Seller or any Tax Affiliates is or will be
required to treat as being owned by another person under the provisions of
Section 168(f)(8) of the Code (as in effect prior to amendment by the Tax Reform
Act of 1986) or is "tax-exempt use property" within the meaning of Section 168
of the Code.
(c) For purposes of this Agreement, the term "Taxes" means all taxes,
charges, fees, levies, or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, social security,
unemployment, excise, estimated, severance, stamp, occupation, property, or
other taxes, customs duties, fees, assessments, or charges of any kind
whatsoever, including, without limitation, all interest and penalties thereon,
and additions to tax or additional amounts imposed by any taxing authority,
domestic or foreign, upon Seller or any Tax Affiliate.
SECTION 4.26 ABSENCE OF CHANGES.
Since the Interim Balance Sheet Date, except as set forth in SCHEDULE
4.26, none of the following has occurred with respect to Seller or any Seller
Subsidiary:
(a) any circumstance, condition, event or state of facts (either
singly or in the aggregate) which has caused, is causing or will cause a
Material Adverse Effect on the Business;
(b) any change in the authorized Capital Stock or Derivative
Securities of a Seller Subsidiary;
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(c) any increase in, or any commitment or promise to increase, the
rates of compensation as of the date hereof, or the amounts or other benefits
paid or payable under any Plan or other compensation or benefit arrangement plan
or policy relating to the Business, except for ordinary and customary bonuses
and salary increases for employees at the times and in the amounts consistent
with its past practice;
(d) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, that will have a Material Adverse
Effect on the Business following the Closing;
(e) any distribution, sale or transfer of, or any Seller Commitment
to distribute, sell or transfer, any of its assets or properties of any kind
which singly is or in the aggregate are Material to the Business, other than
distributions, sales or transfers in the ordinary course of business and
consistent with past practices to Persons other than UIC, the other owners of
the Capital Stock of a Seller Subsidiary and their respective Affiliates;
(f) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it with respect to the Business or a
Seller Subsidiary, provided, that it may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with past
practice, if all those adjustments are included in the Supplemental Information
provided RW pursuant to SECTION 6.07;
(g) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the Business or the Seller Subsidiaries or requiring consent of any
Person to the transfer and assignment of any such assets, property or rights;
(h) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets to be used in the
Business outside of the ordinary course of business consistent with past
practices;
(i) any waiver of any of rights or claims that singly is, or in the
aggregate are, Material to the Business;
(j) any transaction affecting the Purchased Assets, Assumed Contracts
or the Business outside the ordinary course of business or not consistent with
past practices;
(k) except in accordance with the Business's consolidated capital
expenditure budget for the Business's current fiscal year, any capital
expenditure or series of related capital expenditures by Seller and the Seller
Subsidiaries collectively in excess of $50,000, or commitments by Seller and the
Seller Subsidiaries to make capital expenditures totaling in excess of $50,000;
or
(l) any cancellation or termination of a Seller Commitment that is a
Purchased Asset or Assumed Liability.
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SECTION 4.27 PRODUCT QUALITY, WARRANTY CLAIMS, PRODUCT LIABILITY.
All products and services sold, rented, leased, provided or delivered
in connection with the Business by Seller and the Seller Subsidiaries to
customers on or prior to the Closing Date conform or will conform to applicable
contractual commitments, express and implied warranties, product and service
specifications and quality standards except as would not be Material to the
Business, and, to the knowledge of Seller and UIC, Seller has no liability for
replacement or repair thereof or other damages in connection therewith except as
would not be Material to the Business. No product or service sold, leased,
rented, provided or delivered in connection with the Business by Seller and the
Seller Subsidiaries to customers on or prior to the Closing Date is subject to
any guaranty, warranty or other indemnity beyond the applicable standard terms
and conditions of sale, rent or lease, except as set forth on SCHEDULE 4.27.
Except as set forth on SCHEDULE 4.27, Seller and the Seller Subsidiaries have no
liability in connection with the Business arising out of any injury to a person
or property as a result of ownership, possession, provision or use of any
equipment, product or service sold, rented, leased, provided or delivered by
Seller or any Seller Subsidiary on or prior to the Closing Date. All product
liability claims that are presently pending in connection with the Business
against Seller and the Seller Subsidiaries, whether covered by insurance or not
and whether litigation has resulted or not, are listed and summarized on
SCHEDULE 4.27, except as would not be Material.
SECTION 4.28 EXISTING PROJECT CONTRACTS.
SCHEDULE 4.28 lists the remaining amount to be billed on existing
project contracts of the Business. Except as set forth in SCHEDULE 4.28, no
circumstances have come to the attention of Seller, nor have events occurred
since the Interim Balance Sheet Date which are reasonably likely Materially to
increase the costs to be incurred by Seller in order to complete the projects
associated with the contracts listed on SCHEDULE 4.28.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RW AND BUYER
RW and Buyer jointly and severally represent and warrant to Seller
and UIC that all the following representations and warranties in this ARTICLE V
are as of the date of this Agreement, and will be, as amended or supplemented
pursuant to SECTION 6.07, on the Closing Date, true and correct:
SECTION 5.01 ORGANIZATION, POWER.
(a) RW is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and RW has all requisite
corporate power and authority under the laws of its Organization State and its
Charter Documents to enter into this Agreement and perform its obligations
hereunder.
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(b) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and Buyer has all
requisite corporate power and authority under the laws of its Organization State
and its Charter Documents to enter into this Agreement and perform its
obligations hereunder.
(c) Buyer has been organized for the sole purpose of being the
purchaser of the Purchased Assets and has not, and will not, engage in any
activities other than those necessary to effectuate the transactions
contemplated herein.
(d) RW is the record and beneficial owner of all of the issued and
outstanding Capital Stock of Buyer.
SECTION 5.02 AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS; CONSENTS.
(a) The execution, delivery and performance by each RW and Buyer of
this Agreement and each other Transaction Document to which it is a party, and
the effectuation of the transactions contemplated hereby and thereby, are within
its corporate power under its Charter Documents and the applicable Governmental
Requirements of its Organization State and have been duly authorized as required
under its Charter Documents and the applicable Governmental Requirements of its
Organization State.
(b) This Agreement has been, and each of the other Transaction
Documents to which either of RW or Buyer is a party, when executed and delivered
to the other parties thereto, will have been, duly executed and delivered by it
and is, or when so executed and delivered will be, its legal, valid and binding
obligation, enforceable against either RW or Buyer, as the case may be in
accordance with its terms, except as that enforceability may be (i) limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and (ii) subject
to general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Agreement and the
other Transaction Documents to which RW or Buyer is a party by each of RW and
Buyer and the consummation by RW or Buyer of the transactions contemplated
hereby do not conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any Lien, security interest, charge or
encumbrance upon any assets of RW or Buyer, or require any authorization,
consent, approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Charter Documents of RW or Buyer
or any Indebtedness or other agreement or instrument by which RW or Buyer is
bound or affected, or Governmental Requirement to which RW or Buyer is subject.
(d) Except as may be required by the HSR Act, no Governmental
Approvals are required to be obtained, and no reports or notices to or filings
with any Governmental Authority are required to be made for the execution,
delivery or performance by RW or Buyer of the Transaction Documents to which it
is a party, the enforcement against RW or Buyer of its obligations thereunder or
the effectuation of the transactions contemplated hereby and thereby.
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SECTION 5.03 NO DEFAULTS.
No condition or state of facts exists, or, with the giving of notice
or the lapse of time or both, would exist, which (a) entitles any holder of any
outstanding Indebtedness, or any Guaranty not constituting Indebtedness, of RW
or Buyer, or a representative of that holder, to accelerate the maturity, or
require a mandatory prepayment, of that Indebtedness or Guaranty, or affords
that holder or its representative, or any beneficiary of that Guaranty, the
right to require RW or Buyer to redeem, purchase or otherwise acquire, reacquire
or repay any of that Indebtedness, or to perform that Guaranty in whole or in
part, (b) entitles any Person to obtain any Lien (other than a Permitted Lien)
upon any properties or assets of RW or Buyer (or upon revenues, income or
profits of RW or Buyer) or (c) constitutes a violation or breach of, or a
default under, any agreement that is Material to RW or Buyer.
SECTION 5.04 COMPLIANCE WITH LAWS; NO LITIGATION.
To the knowledge of RW, RW is in compliance with all Governmental
Requirements applicable to it. No Litigation is pending or, to the knowledge of
RW or Buyer, threatened to which RW or Buyer is or may become a party which (a)
questions or involves the validity or enforceability of any obligation of RW or
Buyer under any Transaction Document or (b) seeks (or reasonably may be expected
to seek) to prevent or delay consummation by RW or Buyer of the transactions
contemplated by this Agreement to be consummated by RW or Buyer.
SECTION 5.05 EVALUATION OF THE BUSINESS AND SOURCES OF INFORMATION.
Buyer possesses such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
purchase of the Purchased Assets and assumption of the Assumed Liabilities
hereunder. Buyer acknowledges that it has conducted an investigation of the
business and affairs of the Business and that it has received and reviewed all
information provided by Seller to Buyer concerning the Business. Notwithstanding
the foregoing and the investigation conducted by Buyer, and any information that
has come to its attention or should have come to its attention as a result of
such investigation, Buyer and RW shall be entitled to rely on the
representations and warranties made by Seller and UIC hereunder.
ARTICLE VI
COVENANTS EXTENDING TO THE CLOSING DATE
SECTION 6.01 HSR ACT MATTERS.
Each party hereto hereby acknowledges that filings pursuant to and
under the HSR Act are necessary or appropriate in connection with the
effectuation of the consummation of the acquisitions contemplated hereby, and
hereby advises the other parties hereto of that determination. Each of Buyer and
Seller or UIC, as applicable, promptly will compile and file under the HSR Act
such information respecting it as the HSR Act requires in connection with the
transactions contemplated hereby, and the expiration or termination of the
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applicable waiting period and any extension thereof under the HSR Act shall be
deemed a condition precedent set forth in SECTION 7.01(b).
SECTION 6.02 ACCESS AND COOPERATION; DUE DILIGENCE.
(a) From the date hereof and until the Closing Date, UIC and Seller
will (i) afford to the Representatives of RW full and complete access upon prior
notice to all the key employees, sites, properties, books and records of TSG and
the Seller Subsidiaries, (ii) provide RW with such additional financial and
operating data and other information relating to the business and properties of
TSG and the Seller Subsidiaries as RW may from time to time reasonably request
and (iii) cooperate with RW and its Representatives in the preparation of any
documents or other materials which may be required in connection with any other
Transaction Documents. RW and Buyer will treat all Confidential Information
obtained by them in connection with the negotiation and performance of this
Agreement or the due diligence investigations conducted with respect to Seller
and the Business as confidential in accordance with the provisions of SECTION
11.01 and the Confidentiality Agreement dated February 21, 2000 between RW and
UIC.
(b) From the date hereof and until the Closing Date, Buyer shall have
the right to have Kenneth Burk, a Representative of Buyer, observe (in person
and otherwise) the Business, its operations and its conduct, which such
observation shall include the right to review all expenditures of the kind
included in the definition of Net Working Capital Used, and to approve any
expenditures of Net Working Capital Used in excess of $25,000 individually
(other than expenditures made in the ordinary course of business consistent with
past practices), which approval shall not be unreasonably withheld or delayed.
Seller will permit such Representative to discuss the operation of the Business
with Seller.
(c) From the date hereof and until the Closing Date, Seller shall
provide TSG with cash sufficient to pay its expenses for such time period and
shall provide Buyer with weekly reports of all cash receipts and cash
expenditures relating to the Business.
(d) Seller and UIC will use their respective commercially reasonable
efforts to secure, as soon as practicable after the date hereof, all Consents or
other approvals of third Persons as may be necessary to consummate the
transactions contemplated hereby.
(e) If this Agreement is terminated pursuant to SECTION 12.01, RW
promptly will return all written Confidential Information of Seller it then
possesses to Seller.
SECTION 6.03 CONDUCT OF BUSINESS PENDING CLOSING.
From the date hereof and until the Closing Date, with respect to the
Business, the Purchased Assets and the Assumed Liabilities, Seller will, and
will cause TSI to, except as and only to the extent set forth in SCHEDULE 6.03:
(a) carry on the Business in substantially the same manner as it has
heretofore and not introduce any Material new method of management, operation or
accounting;
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(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(c) perform all its Material obligations under agreements relating to
or affecting its assets, properties and other rights;
(d) keep in full force and effect without interruption all its
present insurance policies or other comparable insurance coverage;
(e) use reasonable commercial efforts to (i) maintain and preserve
its business organization intact, (ii) retain its present employees and (iii)
maintain its relationships with suppliers, customers and others having business
relations with it; and
(f) comply with all applicable Governmental Requirements, except as
would not be Material.
SECTION 6.04 PROHIBITED ACTIVITIES.
From the date hereof and until the Closing Date, except as set forth
on SCHEDULE 6.04, without the prior written consent of RW or unless as required
or expressly permitted by this Agreement, Seller will not, and will not permit
TSI to:
(a) make any change in the Charter Documents of any Seller
Subsidiary;
(b) issue, or permit the issuance of, any Capital Stock or issue or
otherwise create any Derivative Securities of any Seller Subsidiary;
(c) enter into any contract or commitment or incur or agree to incur
any Liability which is to be an Assumed Liability or make any capital
expenditures related to the Business in a single transaction or a series of
related transactions involving an aggregate amount of more than $50,000
otherwise than in the ordinary course of business and consistent with its past
practice;
(d) increase or commit or promise to increase the compensation
payable or to become payable to any officer, director, partner, employee or
agent, consultant or independent contractor of any of Seller and the Seller
Subsidiaries performing services to or for the benefit of the Business or make
any discretionary bonus or management fee payment to any such Person, except
bonuses or salary increases to employees at the times and in the amounts
consistent with its past practice and in the ordinary course of business;
(e) create, assume or permit to be created or imposed any Liens
(other than Permitted Liens and Liens under the First Union Agreement) upon any
Purchased Assets, whether now owned or hereafter acquired, except for purchase
money Liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of $100,000 and necessary or desirable for the
conduct of the Business;
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(f) adopt, establish, amend or terminate any Plan or other employee
compensation or benefit arrangement plan or policy covering employees providing
services to the Business, other than as required by law or in the ordinary
course of business;
(g) sell, assign, lease or otherwise transfer or dispose of any of
its owned or leased property or equipment used or useful in the operation of the
Business otherwise than in the ordinary course of business and consistent with
its past practice;
(h) waive any of its Material rights or claims comprising a part of
the Purchased Assets, provided, that it may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with past
practice, but such adjustments will not be deemed to be included in SCHEDULE
4.17 unless specifically listed in the Supplemental Information;
(i) commit a Material breach of or amend or terminate any Seller
Commitment Material to the Business or any of its Governmental Approvals
applicable to the Business; or
(j) enter into any other transaction affecting the Purchased Assets,
the Assumed Liabilities or the Business (i) outside the ordinary course of its
business and consistent with its past practice or (ii) prohibited hereby.
SECTION 6.05 NO SHOP.
Seller and UIC agree that, from the date hereof and until the first
to occur of the Closing Date or the termination of this Agreement in accordance
with ARTICLE XII, neither Seller nor UIC, nor any of their respective officers
and directors shall, and Seller and UIC will direct and use their best efforts
to cause each of their respective Representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer (including any proposal or offer to UIC) with respect
to a purchase of all or any significant portion of the assets of the Business,
other than responses made in the ordinary course of business to inquiries by
suppliers or customers regarding such a purchase (any such proposal or offer
being an "Acquisition Proposal") or engage in any activities, discussions or
negotiations concerning, or provide any Confidential Information with respect to
such a sale of the assets of the Business, or have any discussions with, any
Person relating to an Acquisition Proposal or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. Seller and UIC will: (i)
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and each will take the steps necessary to inform the
Persons referred to in the first sentence of this SECTION 6.05 of the
obligations undertaken in this SECTION 6.05; and (ii) notify RW immediately if
any such inquiries or proposals are received by, any such information is
requested from or any such discussions or negotiations are sought to be
initiated or continued with Seller or UIC.
SECTION 6.06 NOTIFICATION OF CERTAIN MATTERS.
UIC and Seller shall give prompt notice to RW of (a) the existence or
occurrence of each condition or state of facts which will or reasonably could be
expected to cause any representation or warranty of Seller or UIC contained
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herein to be untrue or incorrect in any Material respect at or prior to the
Closing Date and (b) any Material failure of UIC or Seller to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
that Person hereunder, provided, that with respect to the occurrence in the
ordinary course of business consistent with past practice of Seller or any
Seller Subsidiary, as the case may be, of any condition or state of facts which
would cause any information set forth in SCHEDULES 4.14, 4.15, 4.17 AND 4.18 to
be incorrect, no such notice shall be required until RW shall give notice to
Seller and UIC as of the Closing Date. RW shall give prompt notice to Seller of
(a) the existence or occurrence of each condition or state of facts which will
or reasonably could be expected to cause any representation or warranty of RW or
Buyer contained herein to be untrue or incorrect in any Material respect at or
prior to the Closing Date and (b) any Material failure of RW or Buyer to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder. The delivery of any notice pursuant to this SECTION
6.06 shall not be deemed to (a) modify the representations or warranties herein
of the party delivering that notice, or any other party, which modification may
be made only pursuant to SECTION 6.07, (b) modify the conditions set forth in
ARTICLE VII or (c) limit or otherwise affect the remedies available hereunder to
the party receiving that notice.
SECTION 6.07 SUPPLEMENTAL INFORMATION.
Each of Seller and UIC, on the one hand, and RW and Buyer, on the
other, agrees that, with respect to the representations and warranties of that
party contained in this Agreement, that party will have the continuing
obligation (except to the extent otherwise provided in SECTION 6.06) until the
Closing Date to provide the other promptly with such additional supplemental
Information (collectively, the "Supplemental Information"), in the form of (a)
amendments to then existing Schedules or (b) additional Schedules, as would be
necessary, in the light of the circumstances, conditions, events and states of
facts then known to Seller or UIC, to make each of those representations and
warranties true and correct as of the Closing Date. For purposes only of
determining whether the conditions to the obligations of each party hereto have
been satisfied, and not for any purpose under ARTICLE IX, the Schedules as of
the Closing Date shall be deemed to be the Schedules as of the date hereof, as
amended or supplemented by the Supplemental Information provided to RW, on the
one hand, and Seller and UIC, on the other, prior to the Closing Date pursuant
to this SECTION 6.07; provided, however, that if the Supplemental Information so
provided discloses the existence of circumstances, conditions, events or states
of facts which, in any combination thereof, (a) have had a Material Adverse
Effect on the Business, Purchased Assets or Assumed Liabilities or (b) are
having or will have a Material Adverse Effect on the Business, Purchased Assets
or Assumed Liabilities, as the case may be, the other party will be entitled to
terminate this Agreement.
SECTION 6.08 WMATA BREDA REHABILITATION PROGRAM.
Seller has provided to Buyer an opportunity to review, comment on and
approve the Washington Metropolitan Area Transit Authority ("WMATA") bids before
they were submitted for consideration. Unless Buyer notifies Seller otherwise
prior to the date of award (the "Award Date") of the contract with WMATA (the
"WMATA Contract"), the WMATA Contract, if awarded, will become an Assumed
Contract. Seller hereby agrees that upon receiving notice of the Award Date, it
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shall give Buyer prompt written notice of such Award Date, and that a
Representative of Buyer shall be entitled to attend all meetings (in person or
by telephone or teleconference) with WMATA in connection with such award.
Further, Seller hereby agrees that from and after the date hereof, it shall make
no change in any such bids without Buyer's prior written consent thereto.
SECTION 6.09 ACCESS TO EMPLOYEES.
In addition to the access to the Business described in SECTION
6.02(b), from the date hereof to the Closing Date, Seller and UIC shall afford
to Buyer and RW reasonable access to employees of Seller and UIC, as applicable,
who provide services to or for the benefit of the Business, for the purpose of
acquiring information with respect to the Business and to engage in discussions
with respect to potential employment of such persons by Buyer in connection with
the Business. Buyer may offer employment to any such employees as it determines
in its sole discretion.
SECTION 6.10 EMPLOYEES.
(a) No fewer than twenty (20) days prior to the Closing Date, Seller
shall provide to Buyer SCHEDULE 6.10, which shall be a complete list of all
employees of Seller or UIC assigned to the Business (other than John Merry) and
other employees of Seller or its Affiliates who devote more than 50% of their
business time to the Business, and each such employee's compensation, position,
title and date of employment. Seller and UIC hereby agree that they will not
promise, directly or indirectly, continued employment after the Closing to any
employee listed on SCHEDULE 6.10 (other than those designated as "SEPTA
employees" on such Schedule and to whom Buyer shall not offer employment) until
Buyer has identified the Employees (as defined below) as provided below. No
fewer than fifteen (15) days prior to the Closing, Buyer shall identify (by
clearly marking and delivering to Seller) those employees on SCHEDULE 6.10 to
whom Buyer shall offer employment in the Business (the "Employees"), which
number of Employees shall not be less than 175 full-time employees. After Buyer
makes such identification of Employees, Seller and UIC hereby agree that prior
to the Closing they shall not promise, directly or indirectly, continued
employment after the Closing to any Employee. Immediately prior to the Closing,
Seller shall terminate the Transferred Employees and shall pay all sums due to
such employees due by reason of such termination, except accrued vacation. Buyer
will, at its option, with respect to vacation accrued by Transferred Employees
(as defined below) for one year prior to the Closing Date, either (i) assume the
accrued vacation obligations of Seller, or (ii) reimburse Seller for the payment
thereof. Seller shall be responsible for all obligations to Transferred
Employees with respect to accrued vacation other than as specified in the
previous sentence. Buyer shall offer employment to each Employee at the rate of
compensation listed opposite each such Employee's name on SCHEDULE 6.10 and with
employee benefits substantially comparable in the aggregate to that provided to
such Employee by Seller prior to the Closing. All Employees who accept Buyer's
offer of employment are referred to in this SECTION 6.10 as "Transferred
Employees."
(b) Buyer shall credit each Transferred Employee for his or her
length of service with Seller or its Affiliates for all purposes under each
employee benefit and fringe-benefit plan to be provided by Buyer to such
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Transferred Employee (other than for accrual of benefits under a defined benefit
pension plan), to the same extent such service was recognized under a similar
plan of the Seller. Buyer agrees that Transferred Employees and their eligible
dependents will receive credit for their periods of coverage under Seller's
health or disability plans towards satisfying any preexisting condition clause
in such health or disability plans, provided that any such Transferred Employee
or dependent is enrolled in Seller's plans immediately prior to the Closing
Date. Buyer also agrees that Transferred Employees and their eligible dependents
shall receive credit under such healthcare plans for any deductibles and
out-of-pocket maximums paid by such Employee and enrolled dependents for the
current plan year under a healthcare plan maintained by Seller.
(c) Buyer shall provide Transferred Employees whose employment with
Buyer is terminated (other than voluntarily or for cause) in the twelve (12)
month period immediately following the Closing Date with severance pay and
benefits no less favorable than those provided under Seller's severance policy
as set forth in SCHEDULE 6.10(C).
(d) Seller hereby agrees that to the extent required by COBRA, it
will make available health insurance from and after the Closing Date to
Employees who are not Transferred Employees.
SECTION 6.11 PRELIMINARY CLOSING SCHEDULE.
On the Closing Date, Seller shall deliver to Buyer a preliminary
schedule (the "Preliminary Closing Schedule", which schedule shall contain,
based on information known as of the Closing Date, a list, as of the Closing
Date, of (a) all accounts receivable, notes receivable and any other receivables
of the Business, (b) changes to the Purchased Assets since the Interim Balance
Sheet Date, other than receivables described in clause (a), (c) all accounts
payable and accrued Liabilities, (d) changes to the Assumed Liabilities since
the Interim Balance Sheet Date, other than Liabilities described in clause (c)
and (e) Net Working Capital Used. Seller shall also, on the Closing Date,
provide Buyer with evidence of changes in such information since the Interim
Balance Sheet Date, to the extent possible.
SECTION 6.12 EQUIPMENT LEASE.
On or prior to the Closing Date, Buyer shall determine whether it
desires to lease the equipment in Building 111 from Seller after the Closing,
and Seller and Buyer shall negotiate the rate and other terms and conditions of
an equipment lease with respect to such equipment.
SECTION 6.13 CERTAIN AGREEMENTS WITH RELATED PARTIES.
Seller has entered into certain Related Party Agreements in
connection with making bids. Such agreements contemplate that the Related Person
may become a subcontractor of Seller if a contract is awarded to the Seller
("Teaming Agreements"). At or prior to the Closing, Buyer shall designate those
Teaming Agreements it wants terminated. Seller and UIC shall terminate, or cause
to be terminated, the Teaming Agreements so designated and which relate to bids
for which contracts have not been awarded by the Closing Date.
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ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligation of each party hereto to take the actions contemplated
to be taken by that party at the Closing Date is subject to the satisfaction (or
waiver) of each of the following conditions on or before the Closing Date:
(a) No Litigation shall be pending on the Closing Date to restrain,
prohibit or otherwise interfere with, or to obtain Material Damages or other
relief from RW or Buyer, or UIC or Seller, in connection with, the consummation
of the transaction herein contemplated;
(b) All Governmental Approvals (including under the HSR Act) required
to be obtained by any of UIC, Seller, RW or Buyer in connection with the
consummation of the transactions contemplated herein on in the other Transaction
Documents shall have been obtained; and
(c) There shall be no Governmental Requirement in effect that
prohibits, restricts, enjoins or could reasonably be expected to prohibit,
restrict or enjoin the transactions contemplated hereunder.
SECTION 7.02 CONDITIONS TO THE OBLIGATIONS OF SELLER AND UIC.
The obligations of Seller and UIC with respect to actions to be taken
by them at or before the Closing Date are subject to the satisfaction, or the
written waiver by Seller on behalf of itself and UIC pursuant to SECTION 11.05
on or before the Closing Date of, in addition to the conditions specified in
SECTION 7.01, as applicable, all the following conditions:
(a) All the representations and warranties of RW and Buyer in ARTICLE
V (as supplemented as provided herein) shall be true and correct in all Material
respects as of the Closing Date as though made at that time;
(b) RW shall have delivered to Seller:
(i) a duly executed RW officer's certificate in the form
attached hereto as EXHIBIT C;
(ii) opinions dated the Closing Date and addressed to Seller
from counsel for RW and Buyer substantially in the form
attached hereto as EXHIBIT D;
(iii) the Lease Agreement for Building 111 (substantially in
the form attached hereto as EXHIBIT I) and the assignment of
lease or comparable sublease for 300 Clubhouse, together with
an assignment and assumption of the sublease pursuant to which
a portion thereof has been subleased to CAF (in customary form
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to be agreed to prior to the Closing and containing
environmental provisions contained in the Lease Agreement for
Building 111), each duly executed; and
(iv) the Assignment and Assumption Agreement duly executed and
delivered by Buyer in the form of EXHIBIT A.
(c) Seller shall have obtained all of the third-party consents
necessary for the consummation of the transactions contemplated hereunder,
including, without limitation, those consents listed on SCHEDULE 3.03, SCHEDULE
4.20 and all consents (and waivers of rights of first refusal) necessary for the
sale of the Capital Stock of ETI and CAF. In the event that any customer of the
Business has not consented prior to the Closing Date to the assignment of such
customer's contract with Seller, Seller and Buyer agree to enter into a
subcontracting arrangement with respect to services to be provided by the
Business for such customer, until the earlier of the receipt of such consent or
the completion of the performance of the obligations under such contract. If
Seller has not obtained, by the Closing, any third-party consents (including
with respect to the transfer of the Capital Stock of ETI owned by Seller)
necessary for the consummation of the transactions contemplated hereunder, then
Seller and Buyer hereby agree to negotiate in good faith to reach a commercially
reasonable accommodation (consistent with the terms of this Agreement and the
obligations to which such consents would relate) in order to close the
transactions contemplated hereby without such consents, while placing the
parties in position substantially identical to the position they would have been
in had such consent been granted. If the Skoda consent has not been obtained by
the Closing Date, the Closing shall occur, except that (i) the Capital Stock of
ETI shall not be transferred to Buyer, (ii) Buyer shall not assume those Assumed
Contracts relating to ETI set forth on SCHEDULE 7.02(C) ("ETI Assumed
Contracts") and (iii) Buyer shall not be obligated to replace the surety and
bonding obligations and guarantees relating to ETI set forth on SCHEDULE
7.02(C). At the Closing, RW, Buyer and Seller shall enter into an agreement for
the sale by Seller of the Capital Stock of ETI owned by it to Buyer in
consideration for the assumption by Buyer of the ETI Assumed Contracts and
replacement of the surety and bonding obligations and guarantees referred to
above, each effective as of the Closing Date. At the closing of such sale of the
Capital Stock of ETI, Buyer shall reimburse Seller for any payments it may have
made since the Closing Date pursuant to such ETI Assumed Contracts and surety
and bonding obligations and guarantees. Such agreement shall be unconditional,
except for Skoda's right of first refusal under the ETI Stockholders Agreement
as defined in SCHEDULE 7.02(C).
(d) RW shall have caused to be issued to the parties identified on
SCHEDULE 2.03(C) surety bonds to replace the surety and bonding obligations of
UIC and/or Seller listed on such Schedule and to cause UIC and Seller to be
released from any guaranty thereon; provided, however, that in the event Seller
waives satisfaction of this SECTION 7.01(d) as a condition to Closing, RW and
Buyer shall indemnify UIC and Seller for any Liability arising out of any of the
surety and bonding obligations identified on SCHEDULE 2.03(C) in accordance with
ARTICLE IX, and such indemnification obligations shall be secured by, either, at
Buyer's option, standby surety bonds or by letters of credit, and upon any such
waiver, such Liabilities shall become Assumed Liabilities.
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(e) Buyer shall use commercially reasonable efforts to obtain a
release of the guarantee by Seller of the Industrial Lease Agreement between
Lakefront Limited Partnership II and ETI dated April 17, 1998 with respect to
the building known as Lakefront II at 116-120 Lakefront Drive, Cockeysville, MD
(including by offering a replacement guarantee by Buyer) or, if despite such
efforts such release cannot be obtained, Buyer shall indemnify Seller for any
Liability arising out of any such guarantee obligations of Seller.
SECTION 7.03 CONDITIONS TO THE OBLIGATIONS OF RW AND BUYER.
The obligations of RW and Buyer with respect to actions to be taken
by them at or before the Closing Date are subject to the satisfaction or the
written waiver by RW on behalf of itself and Buyer pursuant to SECTION 11.05 on
or before the Closing Date of, in addition to the conditions specified in
SECTION 7.01 as applicable, all the following conditions:
(a) All the representations and warranties of UIC and Seller in
ARTICLE III and ARTICLE IV (as supplemented as provided herein) shall be true
and correct in all Material respects as of the Closing as though made at that
time, except where the failure to be true and correct (i) does not cause, if
quantifiable, a Material Adverse Effect or, (ii) if not quantifiable, is not
material to the business, operations, property or assets, liabilities, financial
condition or results of operations of the Business;
(b) UIC and Seller shall have delivered to RW:
(i) a Seller officer's certificate in the form of EXHIBIT J
hereto;
(ii) opinions dated the Closing Date and addressed to RW from
counsel and internal counsel for Seller substantially in the
form of EXHIBIT K-1 and EXHIBIT K-2 hereto;
(iii) the Lease Agreement for Building 111 (substantially in
the form attached hereto as EXHIBIT I), and the assignment of
lease or comparable sublease for 300 Clubhouse, together with
an assignment and assumption of the sublease pursuant to which
a portion thereof has been subleased to CAF, each duly
executed and substantially in the forms referred to in SECTION
7.02(b)(iii);
(iv) for each of Seller and Seller Subsidiaries, a
certificate, dated as of a recent date, duly issued by the
appropriate Governmental Authorities in its Organization
State, showing it to be in good standing and authorized to do
business in its Organization State;
(v) the third party consents or evidence thereof satisfactory
to RW relating to (A) all Assumed Contracts for which consent
(or waiver of rights of first refusal) or approval is required
thereunder for the assignment thereof to Buyer and (B) the
transfer of the Purchased Assets;
(vi) the bill of sale duly executed and delivered by Seller in
the form attached hereto as EXHIBIT B;
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(vii) the Assignment and Assumption Agreement duly executed
and delivered by Seller in the form attached hereto as EXHIBIT
A;
(viii) duly executed UCC-3 financing statements terminating,
or amending to release the Purchased Assets from such
financing statement, as appropriate, UCC-1 financing
statements filed wherever and whenever and covering Purchased
Assets; and
(ix) such other specific instruments of sale, conveyance,
assignment, transfer, and delivery as are reasonable requested
by Buyer required to vest good and marketable title to the
Purchased Assets in Buyer and to consummate the transactions
contemplated by this Agreement.
ARTICLE VIII
COVENANTS FOLLOWING THE CLOSING
SECTION 8.01 BOOKS AND RECORDS, TAX FILINGS
(a) At any time and from time to time from and after the Closing
Date, Buyer shall permit Seller to have access, during normal business hours and
without undue disruption of Buyer's Business, to those books and records
transferred to Buyer as part of the Purchased Assets, for purposes of preparing
the Seller Final Closing Schedule or any Returns, or any other legitimate
purpose of Seller. Such books and records may be made available at any location
where Buyer maintains same, and all costs and expenses relating to such access
and inspection shall be the responsibility of Seller. In the event that, at any
time and from time to time after the Closing Date, Buyer shall determine to
destroy or dispose of any such books and records, Buyer shall give notice
thereof to Seller not less than thirty days prior to such disposition, and
Seller shall have the right, at their own cost and expense, to take possession
of such books and records prior to their disposition.
(b) Each party hereto will, and will cause its Affiliates to, provide
to each of the other parties hereto such cooperation and information as any of
them reasonably may request in filing any Return, amended Return or claim for
refund, determining a liability for Taxes or a right to refund of Taxes or in
conducting any audit or other proceeding in respect of Taxes. This cooperation
and information shall include providing copies of all relevant portions of the
relevant Returns, together with such accompanying schedules and work papers,
documents relating to rulings or other determinations by Taxing Authorities and
records concerning ownership and Tax bases of property as are relevant which a
party possesses. Each party will make its employees, if any, reasonably
available on a mutually convenient basis at its cost to provide an explanation
of any documents or information so provided. Subject to the preceding sentence,
each party required to file Returns pursuant to this Agreement shall bear all
costs attributable to the preparation and filing of those Returns.
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SECTION 8.02 FINAL CLOSING SCHEDULE.
(a) As soon as is practicable, but in any event no later than fifteen
(15) calendar days after the Closing Date, Seller shall deliver to Buyer a
schedule (the "Seller Final Closing Schedule"), which schedule shall update the
Preliminary Closing Schedule and contain a list, as of the Closing Date, of (a)
all accounts receivable, notes receivable and any other receivables of the
Business, (b) changes to the Purchased Assets since the Interim Balance Sheet
Date, other than receivables described in clause (a), (c) all accounts payable
and accrued Liabilities, (d) changes to the Assumed Liabilities since the
Interim Balance Sheet Date, other than Liabilities described in clause (c) and
(e) Net Working Capital Used. Seller shall also, within such 15-day period,
provide Buyer with evidence of changes in such information since the Interim
Balance Sheet Date, to the extent possible.
(b) If RW intends to dispute any part of the Seller Final Closing
Schedule or any of the supporting material, it shall provide the Seller written
notice within thirty (30) days after receipt of the Seller Final Closing
Schedule of its intent to do so, and to have the independent certified public
accounting firm then regularly retained to report upon RW's financial statements
(the "CPA") conduct an audit of the Seller Final Closing Schedule and the
supporting materials. The CPA shall issue a report containing its findings and
determinations, including a revised Final Closing Schedule (the "Buyer Final
Closing Schedule"). Such audit shall be at the sole expense of RW.
(c) If the Buyer Final Closing Schedule differs from Seller Final
Closing Schedule, then the parties will meet as soon as practical to resolve any
difference. If the difference is not resolved within thirty (30) days of the
issuance of the report by the CPA, then Seller may submit the dispute to binding
resolution before and by PriceWaterhouseCoopers, or if such firm cannot hear
such dispute because of a conflict, before and by a certified public accountant
who is employed by or a partner of a nationally recognized accounting firm (the
"Appointed Accountant"), which is not the CPA or the independent certified
public accountants then retained by Seller or UIC to review their financial
statements. The Appointed Accountant shall choose either the Seller Final
Closing Schedule or the Buyer Final Closing Schedule, and no variation or
compromise thereof, as the definitive Final Closing Schedule to be used for all
purposes of this Agreement. The parties shall pay the costs of the Appointed
Accountant equally, unless the Appointed Accountant, in his/her reasonable
discretion, determines that said costs should be allocated differently.
(d) The Final Closing Schedule, as determined by the last of the
foregoing determination procedures shall be the definitive Final Closing
Schedule and such definitive Final Closing Schedule shall be used for all
purposes set forth in this Agreement.
SECTION 8.03 NAME CHANGE.
Immediately following the Closing, but in no event later than thirty
days, Seller shall cease using "Transportations Systems Group" or "TSG" or any
variant or abbreviation thereof, reasonably objectionable to Buyer and neither
Seller or UIC will utilize any such name or any variant or abbreviation thereof
reasonably objectionable to Buyer without Buyer's written consent. As soon as
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practicable following the Closing Date, RW shall cause the legal name of AAI
Transportation Systems, Inc. to be changed to eliminate the reference to "AAI"
(if such name change is not effectuated by Seller prior to Closing) and shall
use its best efforts to cause the legal name of CAF to be changed to eliminate
the reference to "AAI." It is understood that neither RW nor Buyer shall have
any rights whatsoever to the designation "AAI."
SECTION 8.04 COLLECTION OF ACCOUNTS RECEIVABLE.
Following the Closing, should any account debtor of an account
receivable included within the Purchased Assets make payment of such account
receivable to Seller or UIC, or should Seller or UIC come into possession of
payment of any such account receivable, Seller shall hold the same in trust for
the benefit of Buyer and shall turn the same promptly over to Buyer, in the form
received.
SECTION 8.05 SUBROGATION OF BUYER.
In the event that Buyer shall become liable for or suffer any damage
with respect to any matter which was covered by insurance maintained by Seller
on or prior to the Closing, Buyer shall be and hereby is subrogated to any
rights of Seller under such insurance coverage, and, in addition, Seller agrees
to promptly remit to Buyer any insurance proceeds which it may receive on
account of any such liability or damage.
SECTION 8.06 FURTHER ASSURANCES.
(a) From time to time from and after the Closing Date, the parties
will take any and all such action and execute and deliver to one another any and
all further agreements, instruments, certificates and other documents, as may
reasonably be requested by any other party in order more fully to consummate the
transactions contemplated hereby, and to effect an orderly transition of
ownership and operations of the Business.
(b) From time to time during a twelve-month period from and after the
Closing Date, for and in consideration of the benefits to be derived by Seller
and UIC from the Purchase Price, at reasonable times and upon reasonable notice,
UIC and Seller shall, at Buyer's reasonable expense, meet with, consult with and
assist Buyer and its Representatives in matters pertaining to the transition of
control of the Business and generally provide information and advice, and answer
questions, about the Business, its customers, suppliers and employees.
SECTION 8.07 TRANSITIONAL SERVICES.
From and after the Closing Date, and subject to the terms and
conditions set forth in EXHIBIT E, Seller shall continue to provide the systems
and services historically utilized in connection with the Business, in
accordance with and as identified in EXHIBIT E, for the use and benefit of
Buyer, until such time as specified in EXHIBIT E. RW shall pay Seller for such
services in accordance with EXHIBIT E hereof.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All the provisions of this Agreement will survive the Closing
indefinitely notwithstanding any investigation at any time made by or on behalf
of any party hereto or the provision of any Supplemental Information pursuant to
SECTION 6.07, provided, that the representations and warranties set forth in
ARTICLES III, IV and V (including SECTION 4.13(b), (c) and (d)) and in any
certificate delivered in connection herewith with respect to any of those
representations and warranties will terminate and expire on March 30, 2002,
except as follows: the representations and warranties of UIC or Seller, as the
case may be, which relate expressly or by necessary implication to (i) Taxes or
ERISA will survive until the expiration of the applicable statutes of
limitations (including all periods of extension and tolling), (ii) a breach of
the representations and warranties contained in SECTION 4.11 will survive until
the third anniversary of the date of this Agreement and (iii) a breach of the
representations and warranties contained in SECTION 4.13(a) will survive only
until the Closing Date. After a representation and warranty has terminated and
expired, no indemnification will or may be sought pursuant to this ARTICLE IX on
the basis of that representation and warranty by any Person who would have been
entitled pursuant to this ARTICLE IX to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided,
that, in the case of each representation and warranty that will terminate and
expire as provided in this SECTION 9.01, no claim presented in writing for
indemnification pursuant to this ARTICLE IX on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way
by that termination and expiration.
SECTION 9.02 INDEMNIFICATION OF RW INDEMNIFIED PARTIES.
(a) Subject to the applicable provisions of SECTION 9.01 and SECTION
9.06, UIC and Seller covenant and agree that they, jointly and severally, will
indemnify each RW Indemnified Party against, and hold each RW Indemnified Party
harmless from and in respect of, all Damage Claims that arise from, are based
on, arise out of or are attributable to (i) any breach of the representations
and warranties of UIC or Seller set forth herein or in certificates delivered in
connection herewith; (ii) the nonfulfillment of any covenant or agreement on the
part of UIC or Seller under this Agreement (other than ARTICLE X) including
without limitation, Seller's obligations to pay and discharge the Excluded
Liabilities; (iii) any act, omission or condition occurring or existing prior to
the Closing Date giving rise to any Liability under any Environmental Laws in
connection with the operation of the Business or at any of the Real Property, or
the assertion against any RW Indemnified Party of any Damage Claim arising out
of any act or omission by Seller, UIC or any of their Affiliates, or condition,
occurring or existing as a result of the acts or omissions by Seller, UIC or any
of their Affiliates prior to the Closing Date under any Environmental Laws with
respect to any other real property or the conduct of any other business; (iv)
any Liability arising out of, under or relating to the SEPTA Contract; (v) any
Liability arising under WARN resulting from the consummation of the transactions
contemplated hereby, or (vi) any claim by a creditor or other party to an
Excluded Liability seeking payment or performance thereof by Buyer or RW (each
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such Damage Claim and each Damage Claim described in SECTION 9.02(b) being an
"RW Indemnified Loss");
(b) Once the occurrence of a breach of any representations or
warranties has been established, Damages shall be calculated without regard to
whether such breach caused a Material Adverse Effect.
SECTION 9.03 INDEMNIFICATION OF SELLER INDEMNIFIED PARTIES.
(a) Each of RW and Buyer, jointly and severally, covenants and agrees
that it will indemnify Seller Indemnified Parties against, and hold Seller
Indemnified Parties harmless from and in respect of, all Damage Claims that
arise from, are based on or are attributable to (i) any breach by RW or Buyer of
their representations and warranties set forth herein or in their certificates
delivered to Seller in connection herewith; (ii) the nonfulfillment of any
covenant or agreement on the part of RW or Buyer under this Agreement; or (iii)
the failure to perform the Assumed Contracts or to pay or discharge any Assumed
Liability, including, without limitation, surety obligations as provided in
SECTION 7.01(d) (each such Damage Claim being a "Seller Indemnified Loss").
(b) Once the occurrence of a breach of any representations or
warranties has been established, Damages shall be calculated without regard to
whether such breach caused a Material Adverse Effect.
SECTION 9.04 CONDITIONS OF INDEMNIFICATION.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved as follows in this SECTION 9.04.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") that could
give rise to a right of indemnification under this Agreement and (ii) transmit
to the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to that claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement. Except as
set forth in SECTION 9.01, the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is prejudicial to the defense of that claim. Within 15 days
after receipt of any Claim Notice (the "Election Period"), the Indemnifying
Party shall notify the Indemnified Party (i) whether the Indemnifying Party
disputes its potential liability to the Indemnified Party under this ARTICLE IX
with respect to that Third Party Claim and (ii) whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against that Third Party Claim.
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(c) If the Indemnifying Party notifies the Indemnified Party within
the Election Period that the Indemnifying Party elects to assume the defense of
the Third Party Claim, then the Indemnifying Party shall have the right to
defend, at its sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this SECTION 9.04(c) and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to that Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third Party Claim that (i) purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party, (ii) involves a guilty plea to any crime or (iii) involves a criminal
fine or penalty, whether or not paid by the Indemnifying Party, without the
prior consent of that Indemnified Party (which consent may be withheld in the
sole discretion of that Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party, to file,
during the Election Period, any motion, answer, or other pleadings that the
Indemnified Party shall deem necessary or appropriate to protect its interests
or those of the Indemnifying Party. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this SECTION 9.04(c) and will bear its own
costs and expenses with respect to that participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party (provided, that such
expenses are reasonable), and, on its written notification of that employment,
the Indemnifying Party shall not have the right to assume or continue the
defense of such action on behalf of the Indemnified Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this ARTICLE IX,
(B) elects not to defend the Indemnified Party pursuant to SECTION 9.04(c) or
(C) fails to notify the Indemnified Party that the Indemnifying Party elects to
defend the Indemnified Party pursuant to SECTION 9.04(c) or (ii) elects to
defend the Indemnified Party pursuant to SECTION 9.04 (c) but fails to do so,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party (provided that such expenses are reasonable)
(if the Indemnified Party is entitled to indemnification hereunder), the Third
Party Claim by all appropriate proceedings, which proceedings shall be promptly
and vigorously prosecuted by the Indemnified Party to a final conclusion or
settled provided that the Indemnified Party shall not agree to any settlement
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. The Indemnified Party shall have full
control of such defense and proceedings, subject to the immediately foregoing
sentence. Notwithstanding the foregoing, if the Indemnifying Party has delivered
a written notice to the Indemnified Party to the effect that the Indemnifying
Party disputes its potential liability to the Indemnified Party under this
ARTICLE IX and if such dispute is resolved in favor of the Indemnifying Party,
the Indemnifying Party shall not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this SECTION 9.04 or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses of such litigation. The Indemnifying Party may
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participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this SECTION 9.04(d), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
(e) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of Damages attributable to that claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party disputes such claim, such
dispute shall be resolved by proceedings in an appropriate court of competent
jurisdiction if the parties do not reach a settlement of such dispute within 30
days after notice of a dispute is given.
(f) Payments of all amounts owing by an Indemnifying Party pursuant
to this ARTICLE IX relating to a Third Party Claim shall be made within 30 days
after the latest of (i) the settlement of that Third Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of that Third Party
Claim or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement. Payments of all amounts owing by an Indemnifying Party pursuant to
SECTION 9.04(e) shall be made within 30 days after the later of (i) the
expiration of the 30-day Indemnity Notice period or (ii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's liability
to the Indemnified Party under this Agreement. In the event that any payments
are not made in a timely manner pursuant to this ARTICLE IX, RW or Buyer, or UIC
or Seller, as the case may be, shall have the right to withhold any amounts
otherwise due to Seller or UIC, or RW and Buyer, as the case may be, in order to
satisfy such payment obligation.
SECTION 9.05 REMEDIES NOT EXCLUSIVE.
The remedies provided in this Agreement shall not be exclusive of any
other rights or remedies available to one party against the other, either at law
or in equity, except as to items for which indemnification is provided
hereunder.
SECTION 9.06 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding the provisions of SECTION 9.02(a), neither Seller
nor UIC shall be required to indemnify or hold harmless any of the RW
Indemnified Parties on account of any RW Indemnified Loss unless the liability
of Seller and UIC in respect of that RW Indemnified Loss, when aggregated with
the liability of the Seller and UIC in respect of all RW Indemnified Losses,
exceeds the Threshold Amount, but with respect to the indemnity under SECTION
9.02(a)(i), only to a maximum amount of $2,000,000 (the "Indemnification Cap").
Once the Threshold Amount has been exceeded, Damages shall be calculated only to
the extent in excess of the Threshold Amount.
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(b) Notwithstanding the provisions of SECTION 9.02(a), UIC and Seller
shall be required to indemnify and hold harmless all of the RW Indemnified
Parties on account of any RW Indemnified Loss, without regard to the Threshold
Amount or the Indemnification Cap, that arises out of or relates to (i) Taxes of
Seller or any Seller Subsidiary for any period prior to the Closing Date, (ii)
any breach of the representations or warranties contained in SECTION 4.11, or
(iii) the indemnification obligations contained in SECTION 9.02(a)(iv), SECTION
9.02(a)(v) or SECTION 9.02(a)(vi).
ARTICLE X
LIMITATIONS ON COMPETITION
SECTION 10.01 DEFINITIONS.
For the purposes of this ARTICLE X the following definitions shall
apply:
(a) "Competitive Activities" means the business of overhauling and
upgrading of mass-transit passenger vehicles; manufacture of passenger rail
vehicle truck assemblies; construction of new car shells and final assembly of
new rail transit vehicles; and engineering, development, integration and final
assembly of new electric trolleybuses (other than those items set forth on
SCHEDULE 10.01).
(b) "Competitor" means any business, individual, partnership, joint
venture, association, firm, corporation or other Entity, other than RW or its
Affiliates, engaged, wholly or partly, in Competitive Activities.
(c) "Competitive Position" means, except as otherwise set forth in
SCHEDULE 10.01, (i) having any financial interest in a Competitor, including but
not limited to, the direct or indirect ownership or control of all or any
portion of a Competitor, or acting as a partner, principal, agent or trustee of
any Competitor or (ii) engaging in any employment or independent contractor
arrangement, business or other activity with any Competitor whereby UIC will
render services to or for the benefit of a Competitor.
(d) "Customer" means an actual customer of the Business as of the
Closing Date.
(e) "Non-compete Period" means the period beginning on the Closing
Date and ending on the third anniversary of the Closing Date.
(f) "Non-Public Information" means any confidential, proprietary
business information or data belonging to or pertaining to the Business that
does not constitute a Trade Secret (as hereinafter defined) and that is not
generally known by or available through legal means to the public, including,
but not limited to, information regarding the Business' customers or actively
sought prospective customers, acquisition targets, suppliers, manufacturers and
distributors.
(g) "Territory" means North America.
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(h) "Trade Secrets" means information or data of or about the
Business, including but not limited to technical or non-technical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, products plans, or lists
of actual or potential customers, clients, distributees or licensees,
information concerning the Business' finances, services, staff, contemplated
acquisitions, marketing investigations and surveys, that are not generally known
to, and/or are not readily ascertainable by proper means by, other persons.
SECTION 10.02 TRADE NAME AND NON-PUBLIC INFORMATION.
UIC and Seller, jointly and severally, each hereby agrees that with
regard to each item constituting all or any portion of the Trade Secrets and
Non-Public Information, at all times during which such item continues to
constitute a Trade Secret or Non-Public Information, respectively:
(i) UIC and Seller shall not, directly or by assisting others,
own, manage, operate, join, control or participate in
ownership, management, operation or control of, or be
connected in any manner with, any business conducted under any
corporate or trade name of the Business or name similar
thereto, without the prior written consent of RW;
(ii) UIC and Seller shall hold in confidence all Trade Secrets
and all Non-Public Information and will not, either directly
or indirectly, use, sell, lend, lease, distribute, license,
give, transfer, assign, show, disclose, disseminate,
reproduce, copy, appropriate or otherwise communicate any
Trade Secrets or Non-Public Information, without the prior
written consent of RW except to (a) Representatives of the
other parties to this Agreement or (b) its own
Representatives; provided, that these Representatives (other
than counsel) agree to the confidentiality provisions of this
SECTION 10.02; and provided, further, that Trade Secrets and
Non-Public Information shall not include (i) such information
which becomes known to the public generally through no fault
of UIC or Seller; (ii) information required to be disclosed by
law or the order of any governmental authority under color of
law, provided, that prior to disclosing any information
pursuant to this clause (ii), the disclosing party shall, if
possible, give prior written notice thereof to the party who
owns the Trade Secrets or Non-Public Information and provide
such party with the opportunity to contest such disclosure;
(iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a
lawsuit against the disclosing party or (iv) information UIC
or Seller determines it needs to disclose pursuant to the
Securities Act or the Exchange Act. Nothing herein shall be
construed as prohibiting any party from pursuing any other
available remedy for such breach or threatened breach,
including the recovery of damages; and
(iii) UIC and Seller shall immediately notify RW of any
unauthorized disclosure or use of any Trade Secrets or
Non-Public Information of which UIC or Seller becomes aware.
UIC and Seller shall assist RW at RW's reasonable expense, to
the extent necessary, in the procurement or any protection of
RW's rights to or in any of the Trade Secrets or Non-Public
Information.
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SECTION 10.03 NON-COMPETITION.
(a) Each of UIC and Seller acknowledges that to protect adequately
the interest of Seller in the Business it is essential that any non-compete
covenant with respect thereto cover all Competitive Activities and the entire
Territory.
(b) Each of UIC and Seller hereby agrees that, during the Non-compete
Period, UIC and Seller will not, in the Territory, either directly or
indirectly, alone or in conjunction with any other party, accept, enter into or
take any action in conjunction with or in furtherance of a Competitive Position.
Nothing contained in this SECTION 10.03 shall prohibit UIC and Seller
from acquiring not more than five percent (5%) of any Competitor whose common
stock is publicly traded on a national securities exchange or in the
over-the-counter market.
SECTION 10.04 NON-SOLICITATION.
UIC and Seller each hereby agrees that UIC and Seller will not,
during the Non-compete Period, either directly or indirectly, alone or in
conjunction with any other party:
(a) solicit, divert or appropriate or attempt to solicit, divert or
appropriate, any Customer for the purpose of providing the Customer with
services or products presently offered by the Business and competitive with
those offered by Buyer or any Affiliate of Buyer during the Non-compete Period,
or
(b) solicit or attempt to solicit any officer, director, employee,
consultant, contractor, agent, lessor, lessee, licensor, licensee, supplier of
Buyer or any Affiliate of Buyer in existence on the Closing Date (as set forth
in SCHEDULE 10.04(B), to be delivered by Buyer to Seller no later than the
Closing Date) to violate the terms of any agreement or understanding, or
terminate, alter or lessen that party's affiliation with Buyer or any Affiliate
of Buyer.
SECTION 10.05 DAMAGES.
Because of the difficulty of measuring economic losses to RW as a
result of any breach by UIC and Seller of its respective covenants in SECTION
10.01 through SECTION 10.04, and because of the immediate and irreparable Damage
that could be caused to RW for which it would have no other adequate remedy, UIC
and Seller each agrees that RW may enforce the provisions of SECTION 10.01
through SECTION 10.04 by injunctions and restraining orders against UIC and
Seller if UIC or Seller breaches any of those provisions.
SECTION 10.06 REASONABLE RESTRAINT.
The parties hereto each agree that SECTION 10.01 through SECTION
10.05 impose a reasonable restraint on UIC and Seller in light of the activities
and business of RW on the date hereof and the current business plans of RW and
Buyer.
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SECTION 10.07 SEVERABILITY; REFORMATION.
The covenants in this ARTICLE X are severable and separate, and the
unenforceability of any specific covenant in this ARTICLE X is not intended by
any party hereto to, and shall not, affect the provisions of any other covenant
in this ARTICLE X. If any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in SECTION 10.01 through
SECTION 10.04 are unreasonable, the parties hereto, including Seller or UIC,
acknowledge their mutual intention and agreement that those restrictions be
enforced to the fullest extent the court deems reasonable, and thereby shall be
reformed to that extent.
SECTION 10.08 INDEPENDENT COVENANT.
All the covenants in this ARTICLE X are intended by each party hereto
to, and shall, be construed as an agreement independent of any other provision
in this Agreement, and the existence of any claim or cause of action by Seller,
and Seller Subsidiary or UIC against RW, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by RW of any
covenant in this ARTICLE X. The covenants contained in this ARTICLE X shall not
be affected by any breach of any other provision hereof by any party hereto.
SECTION 10.09 MATERIALITY.
Seller and UIC, jointly and severally, hereby agree that this ARTICLE
X is a material and substantial part of the transactions contemplated hereby.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 TREATMENT OF CONFIDENTIAL INFORMATION.
(a) Each of RW and Buyer on the one hand, and Seller and UIC on the
other hand, severally and not jointly with any other Person, acknowledges that
it has or may have had in the past, currently has and in the future may have
access to Confidential Information of Seller and Seller Subsidiaries (in the
case of RW and Buyer), or RW and its Subsidiaries (in the case of Seller and
UIC). Each of RW and Buyer on the one hand, and Seller and UIC on the other
hand, severally and not jointly with any other Person, agrees that it will keep
confidential all such Confidential Information furnished to it and, except with
the specific prior written consent of RW or Seller, as applicable, will not
disclose such Confidential Information to any Person except to (a)
Representatives of the other parties to this Agreement or (b) its own
Representatives, provided, that these Representatives (other than counsel) agree
to the confidentiality provisions of this SECTION 11.01; and provided, further,
that Confidential Information shall not include (i) such information which
becomes known to the public generally through no fault of RW or Buyer, or UIC or
Seller, as applicable; (ii) information required to be disclosed by law or the
order of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the disclosing party
shall, if possible, give prior written notice thereof to the party who owns the
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Confidential Information and provide such party with the opportunity to contest
such disclosure; (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party or (iv) information RW or UIC determines it needs to disclose
pursuant to the Securities Act or the Exchange Act. Nothing herein shall be
construed as prohibiting any party from pursuing any other available remedy for
such breach or threatened breach, including the recovery of damages.
(b) Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in SECTION 11.01(a), and because
of the immediate and irreparable Damage that would be caused to and for which
there is no other adequate remedy, each of the parties to Agreement the
provisions of SECTION 11.01(a) may be enforced by injunctions and restraining
orders against each of them who breaches any of those provisions.
(c) The obligations of RW set forth in SECTION 6.02(c) are
incorporated in this SECTION 11.01 by this reference.
(d) The obligations of the parties under this SECTION 11.01 shall
survive the termination of this Agreement.
SECTION 11.02 BROKERS AND AGENTS.
(a) Seller and UIC jointly and severally represent and warrant to RW
that such Person has not directly or indirectly employed or become obligated to
pay any broker, finder or similar agent in connection with the transactions
contemplated hereby except First Equity Development, Inc. and agree, without
regard to the Threshold Amount limitations set forth in ARTICLE IX, to indemnify
RW and Buyer against all Damage Claims arising out of claims for any and all
fees and commissions of First Equity Development, Inc. and any other brokers,
finders or similar agents employed, or promised payment, by Seller or UIC.
(b) Buyer and RW jointly and severally represent and warrant to UIC
that such Person has not directly or indirectly employed or become obligated to
pay any broker, finder or similar agent (other than Bengur Bryan & Co., Inc.) in
connection with the transactions contemplated hereby and agree, without regard
to the Threshold Amount limitations set forth in ARTICLE IX, to indemnify UIC
and Seller against all Damage Claims arising out of claims for any and all fees
and commissions of any brokers, finders or similar agents employed, or promised
payment, by Buyer and RW.
SECTION 11.03 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement and the rights of the parties hereunder may not be
assigned (except by operation of law) and shall be binding on and inure to the
benefit of the parties hereto, the successors of RW and UIC. Neither this
Agreement nor any other Transaction Document is intended, or shall be construed,
deemed or interpreted, to confer on any Person not a party hereto or thereto any
rights or remedies hereunder or thereunder, except as otherwise provided
expressly herein or therein.
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SECTION 11.04 ENTIRE AGREEMENT; AMENDMENT; WAIVERS.
This Agreement and the documents delivered pursuant hereto and the
Confidentiality Letter constitute the entire agreement and understanding among
UIC, Seller, Buyer and RW and supersede all prior agreements and understandings,
both written and oral, relating to the subject matter of this Agreement. This
Agreement may be amended, modified or supplemented, and any right hereunder may
be waived, if, but only if, that amendment, modification, supplement or waiver
is in writing and signed by each of UIC, Seller, Buyer and RW. The waiver of any
of the terms and conditions hereof shall not be construed or interpreted as, or
deemed to be, a waiver of any other term or condition hereof.
SECTION 11.05 COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of
which will be an original, but all of which together will constitute one and the
same instrument.
SECTION 11.06 EXPENSES.
Seller and/or UIC each agrees that it will pay all fees, costs and
expenses incurred by them in connection with the transactions contemplated
herein and in the other Transaction Documents, including, without limitation,
the fees and expenses of attorneys, accountants and other persons, and no
portion thereof shall be assumed or paid by RW or Buyer. RW agrees that it will
pay all fees, costs and expenses incurred by it or Buyer in connection with the
transactions contemplated herein and in the other Transaction Documents,
including, without limitation, the fees and expenses of its attorneys,
accountants, and other persons, and no portion thereof shall be paid by UIC or
Seller.
SECTION 11.07 NOTICES.
All notices required or permitted hereunder shall be in writing, and
shall be deemed to be delivered and received
(a) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom notice
is sent or
(b) if delivered by mail (whether actually received or not), at the
close of business on the third Business Day next following the day when placed
in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
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(i) if to RW or Buyer, addressed to it at:
RailWorks Corporation
6225 Smith Avenue, Suite 200
Baltimore, MD 21209-3613
Attn: John G. Larkin
Chief Executive Officer
Facsimile: (410) 580-6099
with copies (which shall not constitute notice
for purposes of this Agreement) to:
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177
Attn: Wesley C. Fredericks, Jr.
Facsimile: (212) 953-7201
(ii) if to UIC or Seller, addressed to them at:
United Industrial Corporation
P.O. Box 126 (York Road & Industry Lane)
Hunt Valley, MD 21030-0126
Attn: James H. Perry
Facsimile: (410) 683-6498
with copies (which shall not constitute notice
for purposes of this Agreement) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Ted S. Waksman
Facsimile: (212) 310-8007
SECTION 11.08 GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF; PROVIDED, HOWEVER, THAT ARTICLE X AND THE RIGHTS AND
OBLIGATIONS THEREUNDER OF THE PARTIES THERETO WILL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF MARYLAND
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
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SECTION 11.09 EXERCISE OF RIGHTS AND REMEDIES.
Except as otherwise provided herein, no delay or omission in the
exercise of any right, power or remedy accruing to any party hereto as a result
of any breach or default hereunder by any other party hereto shall impair any
such right, power or remedy, nor shall it be construed, deemed or interpreted as
a waiver of or acquiescence in any such breach or default, or of any similar
breach or default occurring later; nor shall any waiver of any single breach or
default be construed, deemed or interpreted as a waiver of any other breach or
default hereunder occurring before or after that waiver.
SECTION 11.10 REFORMATION AND SEVERABILITY.
If any provision of this Agreement is invalid, illegal or
unenforceable, that provision shall, to the extent possible, be modified in such
manner as to be valid, legal and enforceable but so as to most nearly retain the
intent of the parties hereto as expressed herein, and if such a modification is
not possible, that provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
SECTION 11.11 REMEDIES CUMULATIVE.
No right, remedy or election given by any term of this Agreement
shall be deemed exclusive, but each shall be cumulative with all other rights,
remedies and elections available at law or in equity.
ARTICLE XII
TERMINATION PROVISIONS.
SECTION 12.01 TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated prior to the Closing as follows:
(i) at the election of Seller or Buyer, by giving written
notice of such termination to the other party, if any one or
more of the conditions to the obligation of Seller or Buyer,
as the case may be, to close the transactions contemplated
hereby have not been fulfilled as of November 15, 2000;
provided, that the right to terminate this Agreement under
this SECTION 12.01, (a)(i) shall not be available to any party
whose failure to meet a condition has been the cause of or
resulted in the failure of the Closing to occur on or before
such date;
(ii) at the election of Seller or Buyer, if any legal
proceeding is commenced or threatened by any governmental
agency or other person directed against the consummation of
the Closing or any other transaction contemplated under this
Agreement and either Seller or Buyer, as the case may be,
reasonably and in good faith deems it impractical or
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inadvisable to proceed in view of such legal proceeding or
threat thereof; or
(iii) at any time on or prior to the Closing Date, by mutual
written consent of Seller and Buyer.
(b) If this Agreement terminates in accordance with SECTION 12.01, it
shall become null and void and have no further force or effect, except as
otherwise provided herein; provided that no party hereto shall be released from
liability for any breach of this Agreement by it.
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.
AAI CORPORATION
By: /s/ James H. Perry
--------------------------------------
Name: James H. Perry
Title: Vice President
UNITED INDUSTRIAL CORPORATION
By: /s/ James H. Perry
--------------------------------------
Name: James H. Perry
Title: Vice President
RAILWORKS TRANSIT VEHICLE GROUP, INC.
By: /s/ John G. Larkin
--------------------------------------
Name: John G. Larkin
Title: President
RAILWORKS CORPORATION
By: /s/ John G. Larkin
--------------------------------------
Name: John G. Larkin
Title: CEO
